Tuesday, May 17, 2011
Fancy Chairs of Afghanistan
This is an odd subject for a photo project but what is more interesting is the gathering of the different people sitting in the chairs
Source
Anothers Truth Update
I read Michael just about every day via email most times I agree with him, he is a man of great wisdom
michaelmandeville.com
THE MAD BAD VERY CRAZY MONKEYS IN THE BARREL
Standing Advisory: Massive criminal operations and manipulations are underway
throughout the “Globalist” world – anchored in London, Tel Aviv, and the U.S. by
the would-be world Aristocracy of the Bankster Class. Unparalleled assaults
have been ramped up the past two years and now are being made against human
rights and norms, national governments, and all industries, commerce, the
environment, and traditional life-sustaining practices everywhere to force
monopolization of all trade and money under the jackboots of criminal
syndicates. The primary proof of poneralogy is now clearly self-evident.
Psychopaths who manage to infect the upper class (or leadership of any group) of
a people eventually corrupt their people into collective insanity, mass
mental/emotional breakdown, and death of any viable social order.
All in all, Chapter 1 is drawing rapidly to a close but will have a surprise
ending in May with another round of physical blockade-running by people of good
and sound conscience from around the world. The stage will thus be set for an
endless Summer of wranglings and recriminations. Chapter 2 will begin In the
Fall. The movement among the Arabs, and indeed among a great many Muslims around
the world, is just beginning. The final chapter will be no more than five years
hence, Israel likely will fold no later than 2017. I suspect that it will end
with the elimination of the Jewish State, the oil oligarchs. Pan-Arabic and
Pan-Islamic movements will reshape the entire region in ways which are not very
predictable, likely nominally democratic states will replace the oil oligarchs,
and the State of Palestine will become the successor to Israel and perhaps as
well of Lebanon, Jordan, and Syria. All this will take ten to 15 years of
change and intrigues.
The U.S. National interest is to avoid becoming caught up in the affairs of any
of these peoples. The kindest, most liberating, most responsible thing we can do
is to liquidate all U.S. militarism activities, involvements, entanglements, and
alliances in the Middle East (and Central Asia). That means withdrawing all
American forces from the Middle East (and Central Asia). That also means
terminating all foreign aid. We are an economically broken people, we have no
aid which we can supply. Those people in the Middle East who need aid should
apply to the Rothschild banks or to the fabulous incomes from the oil
industries.
Unfortunately, it seems that a few more years must pass before those caught up
in the mythology of “America the Superduper” are sufficiently browbeaten to let
go of their delusions.
As events unfold this next few months, they will attempt to permanently
trivialize the entire anti-war movement as essentially a ragtag group of nutbags
holding a variety of unrealistic conspiracy theories and anti-semitic ideas who
are diminishing “our heros” and aiding the terrorists in a variety of ways.
They will attempt to upstage the next attempted “breaking of the gaza blockade”
with terrorist event(s) which will require a major escalation in military and/or
security activity. They will attempt to create false linkages between Ghandian
demonstrators in Gaza and al CIAduh Terrorists in the U.S. train system and
other venues, because “they hate our freedoms”.
In today’s Warcast Media Reality Show Cartoon, they just have to “rumor” the
links from unnamed experts in the CIA “think tanks” to give the idea a hundred
million bucks worth of exposure and an indefinite lifetime on the Iway. We are
going to see this type of operation on steroids this next several weeks, watch
closely as all the big feeding sharks of profiteering join the churn and work to
create the backgrounding for the next level of violence throughout the world to
drown out the pesky peaceniks.
Alex James has composed a couple of very powerful toolboxes which will bring you
the best of the worldwide web for helping people see through the web of lies.
Because of the length of these documents, composed of tons of links, I will send
these separately.
Prison Planet Dot Com provides a ten point list which summarizes the whole case
which demonstrates the Bin Laden Myth as a contrived myth. Get this and use it
as your ammunition box.
http://www.prisonplanet.com/10-facts-that-prove-the-bin-laden-fabl\
e-is-a-contrived-hoax.html
We are all little kids in Gaza now pointing to the Naked Emporer and exclaiming
the obvious. Doesn’t matter whether its high or low vibrations, nor what color
the cat, sting like bees.
Watch for information which comes out of Pakistan. The Pak’s are hopping mad AND
they have the real facts on the ground. From the witnesses in Pakistan will come
the final elements in the proof that the Obummerites are lying through their
fabulous white teeth.
Keep in mind that the political class which has control of the Anglo-American
establishments are in fabulous over-reach. They drink their own Kool-Aid. They
no longer can pose a valid argument which rests on the gravity of simple facts.
Unbalancing them will take not nearly so much as before. Those who are caught
up in the insanity will never let go of their insanity, but those who
fundamentally distrust the elites, which includes the greater portion of
humankind, can be led out of this barrel of the mad bad monkeys.
THE MAD BAD VERY CRAZY MONKEYS IN THE BARREL
Standing Advisory: Massive criminal operations and manipulations are underway
throughout the “Globalist” world – anchored in London, Tel Aviv, and the U.S. by
the would-be world Aristocracy of the Bankster Class. Unparalleled assaults
have been ramped up the past two years and now are being made against human
rights and norms, national governments, and all industries, commerce, the
environment, and traditional life-sustaining practices everywhere to force
monopolization of all trade and money under the jackboots of criminal
syndicates. The primary proof of poneralogy is now clearly self-evident.
Psychopaths who manage to infect the upper class (or leadership of any group) of
a people eventually corrupt their people into collective insanity, mass
mental/emotional breakdown, and death of any viable social order.
All in all, Chapter 1 is drawing rapidly to a close but will have a surprise
ending in May with another round of physical blockade-running by people of good
and sound conscience from around the world. The stage will thus be set for an
endless Summer of wranglings and recriminations. Chapter 2 will begin In the
Fall. The movement among the Arabs, and indeed among a great many Muslims around
the world, is just beginning. The final chapter will be no more than five years
hence, Israel likely will fold no later than 2017. I suspect that it will end
with the elimination of the Jewish State, the oil oligarchs. Pan-Arabic and
Pan-Islamic movements will reshape the entire region in ways which are not very
predictable, likely nominally democratic states will replace the oil oligarchs,
and the State of Palestine will become the successor to Israel and perhaps as
well of Lebanon, Jordan, and Syria. All this will take ten to 15 years of
change and intrigues.
The U.S. National interest is to avoid becoming caught up in the affairs of any
of these peoples. The kindest, most liberating, most responsible thing we can do
is to liquidate all U.S. militarism activities, involvements, entanglements, and
alliances in the Middle East (and Central Asia). That means withdrawing all
American forces from the Middle East (and Central Asia). That also means
terminating all foreign aid. We are an economically broken people, we have no
aid which we can supply. Those people in the Middle East who need aid should
apply to the Rothschild banks or to the fabulous incomes from the oil
industries.
Unfortunately, it seems that a few more years must pass before those caught up
in the mythology of “America the Superduper” are sufficiently browbeaten to let
go of their delusions.
As events unfold this next few months, they will attempt to permanently
trivialize the entire anti-war movement as essentially a ragtag group of nutbags
holding a variety of unrealistic conspiracy theories and anti-semitic ideas who
are diminishing “our heros” and aiding the terrorists in a variety of ways.
They will attempt to upstage the next attempted “breaking of the gaza blockade”
with terrorist event(s) which will require a major escalation in military and/or
security activity. They will attempt to create false linkages between Ghandian
demonstrators in Gaza and al CIAduh Terrorists in the U.S. train system and
other venues, because “they hate our freedoms”.
In today’s Warcast Media Reality Show Cartoon, they just have to “rumor” the
links from unnamed experts in the CIA “think tanks” to give the idea a hundred
million bucks worth of exposure and an indefinite lifetime on the Iway. We are
going to see this type of operation on steroids this next several weeks, watch
closely as all the big feeding sharks of profiteering join the churn and work to
create the backgrounding for the next level of violence throughout the world to
drown out the pesky peaceniks.
Alex James has composed a couple of very powerful toolboxes which will bring you
the best of the worldwide web for helping people see through the web of lies.
Because of the length of these documents, composed of tons of links, I will send
these separately.
Prison Planet Dot Com provides a ten point list which summarizes the whole case
which demonstrates the Bin Laden Myth as a contrived myth. Get this and use it
as your ammunition box.
e-is-a-contrived-hoax.html
We are all little kids in Gaza now pointing to the Naked Emporer and exclaiming
the obvious. Doesn’t matter whether its high or low vibrations, nor what color
the cat, sting like bees.
Watch for information which comes out of Pakistan. The Pak’s are hopping mad AND
they have the real facts on the ground. From the witnesses in Pakistan will come
the final elements in the proof that the Obummerites are lying through their
fabulous white teeth.
Keep in mind that the political class which has control of the Anglo-American
establishments are in fabulous over-reach. They drink their own Kool-Aid. They
no longer can pose a valid argument which rests on the gravity of simple facts.
Unbalancing them will take not nearly so much as before. Those who are caught
up in the insanity will never let go of their insanity, but those who
fundamentally distrust the elites, which includes the greater portion of
humankind, can be led out of this barrel of the mad bad monkeys.
The People vs. Goldman Sachs
From Rolling Stone one of my favorite truth papers, be sure to visit the site and follow links etc By Matt Taibbi (in my opinion) is a great journalist
By Matt Taibbi
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.
They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
This article appears in the May 26, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive May 13.
The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
Photo Gallery: How Goldman top dogs defrauded their clients and lied to Congress
To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis. What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed.
Read Matt Taibbi on Goldman Sachs, the 'great vampire squid'
But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime — a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.
Read Taibbi's 2010 piece on how bailed-out banks are recreating the conditions for a crash
Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn't a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it's an advanced-stage, 1,100-pound medical emergency who hasn't left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.
To fully grasp the case against Goldman, one first needs to understand that the financial crime wave described in the Levin report came on the heels of a decades-long lobbying campaign by Goldman and other titans of Wall Street, who pleaded over and over for the right to regulate themselves.
Before that campaign, banks were closely monitored by a host of federal regulators, including the Office of the Comptroller of the Currency, the FDIC and the Office of Thrift Supervision. These agencies had examiners poring over loans and other transactions, probing for behavior that might put depositors or the system at risk. When the examiners found illegal or suspicious behavior, they built cases and referred them to criminal authorities like the Justice Department.
This system of referrals was the backbone of financial law enforcement through the early Nineties. William Black was senior deputy chief counsel at the Office of Thrift Supervision in 1991 and 1992, the last years of the S&L crisis, a disaster whose pansystemic nature was comparable to the mortgage fiasco, albeit vastly smaller. Black describes the regulatory MO back then. "Every year," he says, "you had thousands of criminal referrals, maybe 500 enforcement actions, 150 civil suits and hundreds of convictions."
But beginning in the mid-Nineties, when former Goldman co-chairman Bob Rubin served as Bill Clinton's senior economic-policy adviser, the government began moving toward a regulatory system that relied almost exclusively on voluntary compliance by the banks. Old-school criminal referrals disappeared down the chute of history along with floppy disks and scripted television entertainment. In 1995, according to an independent study, banking regulators filed 1,837 referrals. During the height of the financial crisis, between 2007 and 2010, they averaged just 72 a year.
But spiking almost all criminal referrals wasn't enough for Wall Street. In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC's inspector general described the program's regulatory army: "The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office."
Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman's CEO at the time. And in exchange for "submitting" to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.
Goldman's chief financial officer then and now, a fellow named David Viniar, wrote a letter in February 2004, commending the SEC for its efforts to develop "a regulatory framework that will contribute to the safety and soundness of financial institutions and markets by aligning regulatory capital requirements more closely with well-developed internal risk-management practices." Translation: Thanks for letting us ignore all those pesky regulations while we turn the staid underwriting business into a Charlie Sheen house party.
Goldman and the other banks argued that they didn't need government supervision for a very simple reason: Rooting out corruption and fraud was in their own self-interest. In the event of financial wrongdoing, they insisted, they would do their civic duty and protect the markets. But in late 2006, well before many of the other players on Wall Street realized what was going on, the top dogs at Goldman — including the aforementioned Viniar — started to fear they were sitting on a time bomb of billions in toxic assets. Yet instead of sounding the alarm, the very first thing Goldman did was tell no one. And the second thing it did was figure out a way to make money on the knowledge by screwing its own clients. So not only did Goldman throw a full-blown "bite me" on its own self-righteous horseshit about "internal risk management," it more or less instantly sped way beyond inaction straight into craven manipulation.
"This is the dog that didn't bark," says Eliot Spitzer, who tangled with Goldman during his years as New York's attorney general. "Their whole political argument for a decade was 'Leave us alone, trust us to regulate ourselves.' They not only abdicated that responsibility, they affirmatively traded against the entire market."
By the end of 2006, Goldman was sitting atop a $6 billion bet on American home loans. The bet was a byproduct of Goldman having helped create a new trading index called the ABX, through which it accumulated huge holdings in mortgage-related securities. But in December 2006, a series of top Goldman executives — including Viniar, mortgage chief Daniel Sparks and senior executive Thomas Montag — came to the conclusion that Goldman was overexposed to mortgages and should get out from under its huge bet as quickly as possible. Internal memos indicate that the executives soon became aware of the host of scams that would crater the global economy: home loans awarded with no documentation, loans with little or no equity in them. On December 14th, Viniar met with Sparks and other executives, and stressed the need to get "closer to home" — i.e., to reduce the bank's giant bet on mortgages.
Sparks followed up that meeting with a seven-point memo laying out how to unload the bank's mortgages. Entry No. 2 is particularly noteworthy. "Distribute as much as possible on bonds created from new loan securitizations," Sparks wrote, "and clean previous positions." In other words, the bank needed to find suckers to buy as much of its risky inventory as possible. Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.
The day he received the Sparks memo, Viniar seconded the plan in a gleeful cheerleading e-mail. "Let's be aggressive distributing things," he wrote, "because there will be very good opportunities as the markets [go] into what is likely to be even greater distress, and we want to be in a position to take advantage of them." Translation: Let's find as many suckers as we can as fast as we can, because we'll only make more money as more and more shit hits the fan.
By February 2007, two months after the Sparks memo, Goldman had gone from betting $6 billion on mortgages to betting $10 billion against them — a shift of $16 billion. Even CEO Lloyd "I'm doing God's work" Blankfein wondered aloud about the bank's progress in "cleaning" its crap. "Could/should we have cleaned up these books before," Blankfein wrote in one e-mail, "and are we doing enough right now to sell off cats and dogs in other books throughout the division?"
How did Goldman sell off its "cats and dogs"? Easy: It assembled new batches of risky mortgage bonds and dumped them on their clients, who took Goldman's word that they were buying a product the bank believed in. The names of the deals Goldman used to "clean" its books — chief among them Hudson and Timberwolf — are now notorious on Wall Street. Each of the deals appears to represent a different and innovative brand of shamelessness and deceit.
In the marketing materials for the Hudson deal, Goldman claimed that its interests were "aligned" with its clients because it bought a tiny, $6 million slice of the riskiest portion of the offering. But what it left out is that it had shorted the entire deal, to the tune of a $2 billion bet against its own clients. The bank, in fact, had specifically designed Hudson to reduce its exposure to the very types of mortgages it was selling — one of its creators, trading chief Michael Swenson, later bragged about the "extraordinary profits" he made shorting the housing market. All told, Goldman dumped $1.2 billion of its own crappy "cats and dogs" into the deal — and then told clients that the assets in Hudson had come not from its own inventory, but had been "sourced from the Street."
Hilariously, when Senate investigators asked Goldman to explain how it could claim it had bought the Hudson assets from "the Street" when in fact it had taken them from its own inventory, the bank's head of CDO trading, David Lehman, claimed it was accurate to say the assets came from "the Street" because Goldman was part of the Street. "They were like, 'We are the Street,'" laughs one investigator.
Hudson lost massive amounts of money almost immediately after the sale was completed. Goldman's biggest client, Morgan Stanley, begged it to liquidate the investment and get out while they could still salvage some value. But Goldman refused, stalling for months as its clients roasted to death in a raging conflagration of losses. At one point, John Pearce, the Morgan Stanley rep dealing with Goldman, lost his temper at the bank's refusal to sell, breaking his phone in frustration. "One day I hope I get the real reason why you are doing this to me," he told a Goldman broker.
Goldman insists it was only required to liquidate the assets "in an orderly fashion." But the bank had an incentive to drag its feet: Goldman's huge bet against the deal meant that the worse Hudson performed, the more money Goldman made. After all, the entire point of the transaction was to screw its own clients so Goldman could "clean its books." The crime was far from victimless: Morgan Stanley alone lost nearly $960 million on the Hudson deal, which admittedly doesn't do much to tug the heartstrings. Except that quickly after Goldman dumped this near-billion-dollar loss on Morgan Stanley, Morgan Stanley turned around and dumped it on taxpayers, who within a year were spending $10 billion bailing out the sucker bank through the TARP program.
It is worth pointing out here that Goldman's behavior in the Hudson scam makes a mockery of standards in the underwriting business. Courts have held that "the relationship between the underwriter and its customer implicitly involves a favorable recommendation of the issued security." The SEC, meanwhile, requires that broker-dealers like Goldman disclose "material adverse facts," which among other things includes "adverse interests." Former prosecutors and regulators I interviewed point to these areas as potential avenues for prosecution; you can judge for yourself if a $2 billion bet against clients qualifies as an "adverse interest" that should have been disclosed.
But these "adverse interests" weren't even the worst part of Hudson. Goldman also used a complex pricing method to turn the deal into an impressive triple screwing. Essentially, Goldman bought some of the mortgage assets in the Hudson deal at a discount, resold them to clients at a higher price and pocketed the difference. This is a little like getting an invoice from an interior decorator who, in addition to his fee for services, charges you $170 a roll for brand-name wallpaper he's actually buying off the back of a truck for $63.
To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it's betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried.
Timberwolf, the most notorious of Goldman's scams, was another car whose engine exploded right out of the lot. As with Hudson, Goldman clients who bought into the deal had no idea they were being sold the "cats and dogs" that the bank was desperately trying to get off its books. An Australian hedge fund called Basis Capital sank $100 million into the deal on June 18th, 2007, and almost immediately found itself in a full-blown death spiral. "We bought it, and Goldman made their first margin call 16 days later," says Eric Lewis, a lawyer for Basis, explaining how Goldman suddenly required his client to put up cash to cover expected losses. "They said, 'We need $5 million.' We're like, what the fuck, what's going on?" Within a month, Basis lost $37.5 million, and was forced to file for bankruptcy.
In many ways, Timberwolf was a perfect symbol of the insane faith-based mathematics and blackly corrupt marketing that defined the mortgage bubble. The deal was built on a satanic derivative structure called the CDO-squared. A normal CDO is a giant pool of loans that are chopped up and layered into different "tranches": the prime or AAA level, the BBB or "mezzanine" level, and finally the equity or "toxic waste" level. Banks had no trouble finding investors for the AAA pieces, which involve betting on the safest borrowers in the pool. And there were usually investors willing to make higher-odds bets on the crack addicts and no-documentation immigrants at the potentially lucrative bottom of the pool. But the unsexy BBB parts of the pool were hard to sell, and the banks didn't want to be stuck holding all of these risky pieces. So what did they do? They took all the extra unsold pieces, threw them in a big box, and repeated the original "tranching" process all over again. What originally were all BBB pieces were diced up and divided anew — and, presto, you suddenly had new AAA securities and new toxic-waste securities.
A CDO, to begin with, is already a highly dubious tool for magically converting risky subprime mortgages into AAA investments. A CDO-squared doubles down on that lunacy, taking the waste products of the original process and converting them into AAA investments. This is kind of like taking all the kids who were picked last to play volleyball in every gym class of every public school in the state, throwing them in a new gym, and pretending that the first 10 kids picked are varsity-level players. Then you take all the unpicked kids left over from that process, throw them in a gym with similar kids from all 50 states, and call the first 10 kids picked All-Americans.
Those "All-Americans" were the assets in the Timberwolf deal. These were the recycled nightmare dregs of the mortgage craze — to quote Beavis and Butt-Head, "the ass of the ass."
Goldman knew the deal sucked long before it dinged the Aussies in Basis Capital for $100 million. In February 2007, Goldman mortgage chief Daniel Sparks and senior executive Thomas Montag exchanged e-mails about the risk of holding all the crap in the Timberwolf deal.
MONTAG: "CDO-squared — how big and how dangerous?"
SPARKS: "Roughly $2 billion, and they are the deals to worry about."
Goldman executives were so "worried" about holding this stuff, in fact, that they quickly sent directives to all of their salespeople, offering "ginormous" credits to anyone who could manage to find a dupe to take the Timberwolf All-Americans off their hands. On Wall Street, directives issued from above are called "axes," and Goldman's upper management spent a great deal of the spring of 2007 "axing" Timberwolf. In a crucial conference call on May 20th that included Viniar, Sparks oversaw a PowerPoint presentation spelling out, in writing, that Goldman's mortgage desk was "most concerned" about Timberwolf and another CDO-squared deal. In a later e-mail, he offered an even more dire assessment of such deals: "There is real market-meltdown potential."
On May 22nd, two days after the conference call, Goldman sales rep George Maltezos urged the Australians at Basis to hurry up and buy what the bank knew was a deadly investment, suggesting that the "return on invested capital for Basis is over 60 percent." Maltezos was so stoked when he first identified the Aussies as a target in the scam that he subject-lined his e-mail "Utopia."
"I think," Maltezos wrote, "I found white elephant, flying pig and unicorn all at once."
The whole transaction can be summed up by the now-notorious e-mail that Montag wrote to Sparks only four days after they sold $100 million of Timberwolf to Basis. "Boy," Montag wrote, "that timeberwof [sic] was one shitty deal."
Last year, in the one significant regulatory action the government has won against the big banks, the SEC sued Goldman over a scam called Abacus, in which the bank "rented" its name to a billionaire hedge-fund viper to fleece investors out of more than $1 billion. Goldman agreed to pay $550 million to settle the suit, though no criminal charges were brought against the bank or its executives. But in light of the Levin report, that SEC action now looks woefully inadequate. Yes, it was a record fine — but it pales in comparison to the money Goldman has taken from the government since the crash. As Spitzer notes, Goldman's reaction was basically, "OK, we'll pay you $550 million to settle the Abacus case — that's a small price to pay for the $12.9 billion we got for the AIG bailout." Now, adds Spitzer, "everybody can just go home and pretend it was only $12.4 billion — and Goldman can smile all the way to the bank. The question is, now that we've seen this report, there are a bunch of story lines that seem to be at least as egregious as Abacus. Are they going to bring cases?"
Here is where the supporters of Goldman and other big banks will stand up and start wanding the air full of confusing terms like "scienter" and "loss causation" — legalese mumbo jumbo that attempts to convince the ignorantly enraged onlooker that, according to American law, these grotesque tales of grand theft and fraud you've just heard are actually more innocent than you think. Yes, they will say, it may very well be a prosecutable crime for a corner-store Arab to take $2 from a customer selling tap water as Perrier. But that does not mean it's a crime for Goldman Sachs to take $100 million from a foreign hedge fund doing the same thing! No, sir, not at all! Then you'll be told that the Supreme Court has been limiting corporate liability for fraud for decades, that in order to gain a conviction one must prove a conscious intent to deceive, that the 1976 ruling in Ernst and Ernst clearly states....
Leave all that aside for a moment. Though many legal experts agree there is a powerful argument that the Levin report supports a criminal charge of fraud, this stuff can keep the lawyers tied up for years. So let's move on to something much simpler. In the spring of 2010, about a year into his investigation, Sen. Levin hauled all of the principals from these rotten Goldman deals to Washington, made them put their hands on the Bible and take oaths just like normal people, and demanded that they explain themselves. The legal definition of financial fraud may be murky and complex, but everybody knows you can't lie to Congress.
"Article 18 of the United States Code, Section 1001," says Loyola University law professor Michael Kaufman. "There are statutes that prohibit perjury and obstruction of justice, but this is the federal statute that explicitly prohibits lying to Congress."
The law is simple: You're guilty if you "knowingly and willfully" make a "materially false, fictitious or fraudulent statement or representation." The punishment is up to five years in federal prison.
When Roger Clemens went to Washington and denied taking a shot of steroids in his ass, the feds indicted him — relying not on a year's worth of graphically self-incriminating e-mails, but chiefly on the testimony of a single individual who had been given a deal by the government. Yet the Justice Department has shown no such prosecutorial zeal since April 27th of last year, when the Goldman executives who oversaw the Timberwolf, Hudson and Abacus deals arrived on the Hill and one by one — each seemingly wearing the same mask of faint boredom and irritated condescension — sat before Levin's committee and dodged volleys of questions.
Before the hearing, even some of Levin's allies worried privately about his taking on Goldman and other powerful interests. The job, they said, was best left to professional prosecutors, people with experience building cases. "A senator's office is not an enormous repository of expertise," one former regulator told me. But in the case of this particular senator, that concern turned out to be misplaced. A Harvard-educated lawyer, Levin has a long record of using his subcommittee to spend a year or more carefully building cases that lead to criminal prosecutions. His 2003 investigation into abusive tax shelters led to 19 indictments of individuals at KPMG, while a 2006 probe fueled insider-trading charges against the notorious Wyly brothers, a pair of billionaire Texans who manipulated offshore investment trusts. The investigation of Goldman was an attempt to find out what went wrong in the years leading up to the financial crash, and the questioning of the bank's executives was not one of those for-the-cameras-only events where congressmen wing ad-libbed questions in search of sound bites. In the weeks leading up to the hearing, Levin's team carefully rehearsed the moment with committee members. They knew the possible answers that Goldman might give, and they were ready with specific counterquestions. What ensued looked more like a good old-fashioned courtroom grilling than a photo-op for grinning congressmen.
Sparks, who stepped down as Goldman's mortgage chief in 2008, cut a striking figure in his testimony. With his severe crew cut, deep-set eyes and jockish intransigence, he looked like a cross between H.R. Haldeman and John Rocker. He repeatedly dodged questions from Levin about whether or not the bank had a responsibility to tell its clients that it was betting against the same stuff it was selling them. When asked directly if he had that responsibility, Sparks answered, "The clients who did not want to participate in that deal did not." When Levin pressed him again, asking if he had a duty to disclose that Goldman had an "adverse interest" to the deals being sold to clients, Sparks fidgeted and pretended not to comprehend the question. "Mr. Chairman," he said, "I'm just trying to understand."
OK, fine — non-answer answers. "My guess is they were all pretty well coached up," says Kaufman, the law professor. But then Sparks had a revealing exchange with Sen. Jon Tester of Montana. Tester calls the Goldman deals "a wreck waiting to happen," noting that the CDOs "were all downgraded to junk in very short order."
At which point, Sparks replies, "Well, senator, at the time we did those deals, we expected those deals to perform."
Tester then cannily asks if by "perform," Sparks means go to shit — which would have been an honest answer. "Perform in what way?" Tester asks. "Perform to go to junk so that the shorts made out?"
Unable to resist the taunt, Sparks makes a fateful decision to defend his honor. "To not be downgraded to junk in that short a time frame," he says. Then he pauses and decides to dispense with the hedging phrase "in that short a time frame."
"In fact," Sparks says, "to not be downgraded to junk."
So Sparks goes before Congress and, under oath, tells a U.S. senator that at the time he was selling Timberwolf, he expected it to "perform." But an internal document he approved in May 2007 predicted exactly the opposite, warning that Goldman's mortgage desk expected such deals to "underperform." Here are some other terms that Sparks used in e-mails about the subprime market affecting deals like Timberwolf around that same time: "bad and getting worse," "get out of everything," "game over," "bad news everywhere" and "the business is totally dead."
And we indicted Roger Clemens?
Another extraordinary example of Goldman's penchant for truth avoidance came when Joshua Birnbaum, former head of structured-products trading for the bank, gave a deposition to Levin's committee. Asked point-blank if Goldman's huge "short" on mortgages was an intentional bet against the market or simply a "hedge" against potential losses, Birnbaum played dumb. "I do not know whether the shorts were a hedge," he said. But the committee, it turned out, already knew that Birnbaum had written a memo in which he had spelled out the truth: "The shorts were not a hedge." When Birnbaum's lawyers learned that their client's own words had been used against him, they hilariously sent an outraged letter complaining that Birnbaum didn't know the committee had his memo when he decided to dodge the question. They also submitted a "supplemental" answer. Birnbaum now said, "Having reviewed the document the staff did not previously provide me" — his own words! — "I can now recall that ... I believed ... these short positions were not a hedge." (Goldman, for its part, dismisses Birnbaum as a single trader who "neither saw nor knew the firm's overall risk positions.")
When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. When Levin asked how Blankfein felt about the fact that Goldman collected $13 billion from U.S. taxpayers through the AIG bailout, the CEO deflected over and over, insisting that Goldman would somehow have made that money anyway through its private insurance policies on AIG. When Levin pressed Blankfein, pointing out that he hadn't answered the question, Blankfein simply peered at Levin like he didn't understand.
But Blankfein also testified unequivocally to the following:
"Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is, we were not consistently or significantly net-short the market in residential mortgage-related products in 2007 and 2008. We didn't have a massive short against the housing market, and we certainly did not bet against our clients."
Levin couldn't believe what he was hearing. "Heck, yes, I was offended," he says. "Goldman's CEO claimed the firm 'didn't have a massive short,' when the opposite was true." First of all, in Goldman's own internal memoranda, the bank calls its giant, $13 billion bet against mortgages "the big short." Second, by the time Sparks and Co. were unloading the Timberwolves of the world on their "unicorns" and "flying pigs" in the summer of 2007, Goldman's mortgage department accounted for 54 percent of the bank's risk. That means more than half of all the bank's risk was wrapped up in its bet against the mortgage market — a "massive short" by any definition. Indeed, the bank was betting so much money on mortgages that its executives had become comically blasé about giant swings on a daily basis. When Goldman lost more than $100 million on August 8th, 2007, Montag circulated this e-mail: "So who lost the hundy?"
This month, after releasing his report, Levin sent all of this material to the Justice Department. His conclusion was simple. "In my judgment," he declared, "Goldman clearly misled their clients, and they misled the Congress." Goldman, unsurprisingly, disagreed: "Our testimony was truthful and accurate, and that applies to all of our testimony," said spokesman Michael DuVally. In a statement to Rolling Stone, Goldman insists that its behavior throughout the period covered in the Levin report was consistent with responsible business practice, and that its machinations in the mortgage market were simply an attempt to manage risk.
It wouldn't be hard for federal or state prosecutors to use the Levin report to make a criminal case against Goldman. I ask Eliot Spitzer what he would do if he were still attorney general and he saw the Levin report. "Once the steam stopped coming out of my ears, I'd be dropping so many subpoenas," he says. "And I would parse every potential inconsistency between the testimony they gave to Congress and the facts as we now understand them."
I ask what inconsistencies jump out at him. "They keep claiming they were only marginally short, that it was more just servicing their clients," he says. "But it sure doesn't look like that." He pauses. "They were $13 billion short. That's big — 50 percent of their risk. It was so completely disproportionate."
Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn't make a massive short bet and didn't bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a "big short" and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?
This issue is bigger than what Goldman executives did or did not say under oath. The Levin report catalogs dozens of instances of business practices that are objectively shocking, no matter how any high-priced lawyer chooses to interpret them: gambling billions on the misfortune of your own clients, gouging customers on prices millions of dollars at a time, keeping customers trapped in bad investments even as they begged the bank to sell, plus myriad deceptions of the "failure to disclose" variety, in which customers were pitched investment deals without ever being told they were designed to help Goldman "clean" its bad inventory. For years, the soundness of America's financial system has been based on the proposition that it's a crime to lie in a prospectus or a sales brochure. But the Levin report reveals a bank gone way beyond such pathetic little boundaries; the collective picture resembles a financial version of The Jungle, a portrait of corporate sociopathy that makes you never want to go near a sausage again.
Upton Sinclair's narrative shocked the nation into a painful realization about the pervasive filth and corruption behind America's veneer of smart, robust efficiency. But Carl Levin's very similar tale probably will not. The fact that this evidence comes from a U.S. senator's office, and not the FBI or the SEC, is itself an element in the worsening tale of lawlessness and despotism that sparked a global economic meltdown. "Why should Carl Levin be the one who needs to do this?" asks Spitzer. "Where's the SEC? Where are any of the regulatory bodies?"
This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are.
Source
By Matt Taibbi
A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges.
They weren't murderers or anything; they had merely stolen more money than most people can rationally conceive of, from their own customers, in a few blinks of an eye. But then they went one step further. They came to Washington, took an oath before Congress, and lied about it.
Thanks to an extraordinary investigative effort by a Senate subcommittee that unilaterally decided to take up the burden the criminal justice system has repeatedly refused to shoulder, we now know exactly what Goldman Sachs executives like Lloyd Blankfein and Daniel Sparks lied about. We know exactly how they and other top Goldman executives, including David Viniar and Thomas Montag, defrauded their clients. America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn't leave much doubt: Goldman Sachs should stand trial.
This article appears in the May 26, 2011 issue of Rolling Stone. The issue is available now on newsstands and will appear in the online archive May 13.
The great and powerful Oz of Wall Street was not the only target of Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, the 650-page report just released by the Senate Subcommittee on Investigations, chaired by Democrat Carl Levin of Michigan, alongside Republican Tom Coburn of Oklahoma. Their unusually scathing bipartisan report also includes case studies of Washington Mutual and Deutsche Bank, providing a panoramic portrait of a bubble era that produced the most destructive crime spree in our history — "a million fraud cases a year" is how one former regulator puts it. But the mountain of evidence collected against Goldman by Levin's small, 15-desk office of investigators — details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department — stands as the most important symbol of Wall Street's aristocratic impunity and prosecutorial immunity produced since the crash of 2008.
Photo Gallery: How Goldman top dogs defrauded their clients and lied to Congress
To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn't exist) was almost completely unconnected to the systematic corruption that led to the crisis. What's more, many of the earlier criminals in the chain of corruption — from subprime lenders like Countrywide, who herded old ladies and ghetto families into bad loans, to rapacious banks like Washington Mutual, who pawned off fraudulent mortgages on investors — wound up going belly up, sunk by their own greed.
Read Matt Taibbi on Goldman Sachs, the 'great vampire squid'
But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences. Thus, while much of the Levin report describes past history, the Goldman section describes an ongoing? crime — a powerful, well-connected firm, with the ear of the president and the Treasury, that appears to have conquered the entire regulatory structure and stands now on the precipice of officially getting away with one of the biggest financial crimes in history.
Read Taibbi's 2010 piece on how bailed-out banks are recreating the conditions for a crash
Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. Goldman isn't a pudgy housewife who broke her diet with a few Nilla Wafers between meals — it's an advanced-stage, 1,100-pound medical emergency who hasn't left his apartment in six years, and is found by paramedics buried up to his eyes in cupcake wrappers and pizza boxes. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.
To fully grasp the case against Goldman, one first needs to understand that the financial crime wave described in the Levin report came on the heels of a decades-long lobbying campaign by Goldman and other titans of Wall Street, who pleaded over and over for the right to regulate themselves.
Before that campaign, banks were closely monitored by a host of federal regulators, including the Office of the Comptroller of the Currency, the FDIC and the Office of Thrift Supervision. These agencies had examiners poring over loans and other transactions, probing for behavior that might put depositors or the system at risk. When the examiners found illegal or suspicious behavior, they built cases and referred them to criminal authorities like the Justice Department.
This system of referrals was the backbone of financial law enforcement through the early Nineties. William Black was senior deputy chief counsel at the Office of Thrift Supervision in 1991 and 1992, the last years of the S&L crisis, a disaster whose pansystemic nature was comparable to the mortgage fiasco, albeit vastly smaller. Black describes the regulatory MO back then. "Every year," he says, "you had thousands of criminal referrals, maybe 500 enforcement actions, 150 civil suits and hundreds of convictions."
But beginning in the mid-Nineties, when former Goldman co-chairman Bob Rubin served as Bill Clinton's senior economic-policy adviser, the government began moving toward a regulatory system that relied almost exclusively on voluntary compliance by the banks. Old-school criminal referrals disappeared down the chute of history along with floppy disks and scripted television entertainment. In 1995, according to an independent study, banking regulators filed 1,837 referrals. During the height of the financial crisis, between 2007 and 2010, they averaged just 72 a year.
But spiking almost all criminal referrals wasn't enough for Wall Street. In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC's inspector general described the program's regulatory army: "The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office."
Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman's CEO at the time. And in exchange for "submitting" to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.
Goldman's chief financial officer then and now, a fellow named David Viniar, wrote a letter in February 2004, commending the SEC for its efforts to develop "a regulatory framework that will contribute to the safety and soundness of financial institutions and markets by aligning regulatory capital requirements more closely with well-developed internal risk-management practices." Translation: Thanks for letting us ignore all those pesky regulations while we turn the staid underwriting business into a Charlie Sheen house party.
Goldman and the other banks argued that they didn't need government supervision for a very simple reason: Rooting out corruption and fraud was in their own self-interest. In the event of financial wrongdoing, they insisted, they would do their civic duty and protect the markets. But in late 2006, well before many of the other players on Wall Street realized what was going on, the top dogs at Goldman — including the aforementioned Viniar — started to fear they were sitting on a time bomb of billions in toxic assets. Yet instead of sounding the alarm, the very first thing Goldman did was tell no one. And the second thing it did was figure out a way to make money on the knowledge by screwing its own clients. So not only did Goldman throw a full-blown "bite me" on its own self-righteous horseshit about "internal risk management," it more or less instantly sped way beyond inaction straight into craven manipulation.
"This is the dog that didn't bark," says Eliot Spitzer, who tangled with Goldman during his years as New York's attorney general. "Their whole political argument for a decade was 'Leave us alone, trust us to regulate ourselves.' They not only abdicated that responsibility, they affirmatively traded against the entire market."
By the end of 2006, Goldman was sitting atop a $6 billion bet on American home loans. The bet was a byproduct of Goldman having helped create a new trading index called the ABX, through which it accumulated huge holdings in mortgage-related securities. But in December 2006, a series of top Goldman executives — including Viniar, mortgage chief Daniel Sparks and senior executive Thomas Montag — came to the conclusion that Goldman was overexposed to mortgages and should get out from under its huge bet as quickly as possible. Internal memos indicate that the executives soon became aware of the host of scams that would crater the global economy: home loans awarded with no documentation, loans with little or no equity in them. On December 14th, Viniar met with Sparks and other executives, and stressed the need to get "closer to home" — i.e., to reduce the bank's giant bet on mortgages.
Sparks followed up that meeting with a seven-point memo laying out how to unload the bank's mortgages. Entry No. 2 is particularly noteworthy. "Distribute as much as possible on bonds created from new loan securitizations," Sparks wrote, "and clean previous positions." In other words, the bank needed to find suckers to buy as much of its risky inventory as possible. Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.
The day he received the Sparks memo, Viniar seconded the plan in a gleeful cheerleading e-mail. "Let's be aggressive distributing things," he wrote, "because there will be very good opportunities as the markets [go] into what is likely to be even greater distress, and we want to be in a position to take advantage of them." Translation: Let's find as many suckers as we can as fast as we can, because we'll only make more money as more and more shit hits the fan.
By February 2007, two months after the Sparks memo, Goldman had gone from betting $6 billion on mortgages to betting $10 billion against them — a shift of $16 billion. Even CEO Lloyd "I'm doing God's work" Blankfein wondered aloud about the bank's progress in "cleaning" its crap. "Could/should we have cleaned up these books before," Blankfein wrote in one e-mail, "and are we doing enough right now to sell off cats and dogs in other books throughout the division?"
How did Goldman sell off its "cats and dogs"? Easy: It assembled new batches of risky mortgage bonds and dumped them on their clients, who took Goldman's word that they were buying a product the bank believed in. The names of the deals Goldman used to "clean" its books — chief among them Hudson and Timberwolf — are now notorious on Wall Street. Each of the deals appears to represent a different and innovative brand of shamelessness and deceit.
In the marketing materials for the Hudson deal, Goldman claimed that its interests were "aligned" with its clients because it bought a tiny, $6 million slice of the riskiest portion of the offering. But what it left out is that it had shorted the entire deal, to the tune of a $2 billion bet against its own clients. The bank, in fact, had specifically designed Hudson to reduce its exposure to the very types of mortgages it was selling — one of its creators, trading chief Michael Swenson, later bragged about the "extraordinary profits" he made shorting the housing market. All told, Goldman dumped $1.2 billion of its own crappy "cats and dogs" into the deal — and then told clients that the assets in Hudson had come not from its own inventory, but had been "sourced from the Street."
Hilariously, when Senate investigators asked Goldman to explain how it could claim it had bought the Hudson assets from "the Street" when in fact it had taken them from its own inventory, the bank's head of CDO trading, David Lehman, claimed it was accurate to say the assets came from "the Street" because Goldman was part of the Street. "They were like, 'We are the Street,'" laughs one investigator.
Hudson lost massive amounts of money almost immediately after the sale was completed. Goldman's biggest client, Morgan Stanley, begged it to liquidate the investment and get out while they could still salvage some value. But Goldman refused, stalling for months as its clients roasted to death in a raging conflagration of losses. At one point, John Pearce, the Morgan Stanley rep dealing with Goldman, lost his temper at the bank's refusal to sell, breaking his phone in frustration. "One day I hope I get the real reason why you are doing this to me," he told a Goldman broker.
Goldman insists it was only required to liquidate the assets "in an orderly fashion." But the bank had an incentive to drag its feet: Goldman's huge bet against the deal meant that the worse Hudson performed, the more money Goldman made. After all, the entire point of the transaction was to screw its own clients so Goldman could "clean its books." The crime was far from victimless: Morgan Stanley alone lost nearly $960 million on the Hudson deal, which admittedly doesn't do much to tug the heartstrings. Except that quickly after Goldman dumped this near-billion-dollar loss on Morgan Stanley, Morgan Stanley turned around and dumped it on taxpayers, who within a year were spending $10 billion bailing out the sucker bank through the TARP program.
It is worth pointing out here that Goldman's behavior in the Hudson scam makes a mockery of standards in the underwriting business. Courts have held that "the relationship between the underwriter and its customer implicitly involves a favorable recommendation of the issued security." The SEC, meanwhile, requires that broker-dealers like Goldman disclose "material adverse facts," which among other things includes "adverse interests." Former prosecutors and regulators I interviewed point to these areas as potential avenues for prosecution; you can judge for yourself if a $2 billion bet against clients qualifies as an "adverse interest" that should have been disclosed.
But these "adverse interests" weren't even the worst part of Hudson. Goldman also used a complex pricing method to turn the deal into an impressive triple screwing. Essentially, Goldman bought some of the mortgage assets in the Hudson deal at a discount, resold them to clients at a higher price and pocketed the difference. This is a little like getting an invoice from an interior decorator who, in addition to his fee for services, charges you $170 a roll for brand-name wallpaper he's actually buying off the back of a truck for $63.
To recap: Goldman, to get $1.2 billion in crap off its books, dumps a huge lot of deadly mortgages on its clients, lies about where that crap came from and claims it believes in the product even as it's betting $2 billion against it. When its victims try to run out of the burning house, Goldman stands in the doorway, blasts them all with gasoline before they can escape, and then has the balls to send a bill overcharging its victims for the pleasure of getting fried.
Timberwolf, the most notorious of Goldman's scams, was another car whose engine exploded right out of the lot. As with Hudson, Goldman clients who bought into the deal had no idea they were being sold the "cats and dogs" that the bank was desperately trying to get off its books. An Australian hedge fund called Basis Capital sank $100 million into the deal on June 18th, 2007, and almost immediately found itself in a full-blown death spiral. "We bought it, and Goldman made their first margin call 16 days later," says Eric Lewis, a lawyer for Basis, explaining how Goldman suddenly required his client to put up cash to cover expected losses. "They said, 'We need $5 million.' We're like, what the fuck, what's going on?" Within a month, Basis lost $37.5 million, and was forced to file for bankruptcy.
In many ways, Timberwolf was a perfect symbol of the insane faith-based mathematics and blackly corrupt marketing that defined the mortgage bubble. The deal was built on a satanic derivative structure called the CDO-squared. A normal CDO is a giant pool of loans that are chopped up and layered into different "tranches": the prime or AAA level, the BBB or "mezzanine" level, and finally the equity or "toxic waste" level. Banks had no trouble finding investors for the AAA pieces, which involve betting on the safest borrowers in the pool. And there were usually investors willing to make higher-odds bets on the crack addicts and no-documentation immigrants at the potentially lucrative bottom of the pool. But the unsexy BBB parts of the pool were hard to sell, and the banks didn't want to be stuck holding all of these risky pieces. So what did they do? They took all the extra unsold pieces, threw them in a big box, and repeated the original "tranching" process all over again. What originally were all BBB pieces were diced up and divided anew — and, presto, you suddenly had new AAA securities and new toxic-waste securities.
A CDO, to begin with, is already a highly dubious tool for magically converting risky subprime mortgages into AAA investments. A CDO-squared doubles down on that lunacy, taking the waste products of the original process and converting them into AAA investments. This is kind of like taking all the kids who were picked last to play volleyball in every gym class of every public school in the state, throwing them in a new gym, and pretending that the first 10 kids picked are varsity-level players. Then you take all the unpicked kids left over from that process, throw them in a gym with similar kids from all 50 states, and call the first 10 kids picked All-Americans.
Those "All-Americans" were the assets in the Timberwolf deal. These were the recycled nightmare dregs of the mortgage craze — to quote Beavis and Butt-Head, "the ass of the ass."
Goldman knew the deal sucked long before it dinged the Aussies in Basis Capital for $100 million. In February 2007, Goldman mortgage chief Daniel Sparks and senior executive Thomas Montag exchanged e-mails about the risk of holding all the crap in the Timberwolf deal.
MONTAG: "CDO-squared — how big and how dangerous?"
SPARKS: "Roughly $2 billion, and they are the deals to worry about."
Goldman executives were so "worried" about holding this stuff, in fact, that they quickly sent directives to all of their salespeople, offering "ginormous" credits to anyone who could manage to find a dupe to take the Timberwolf All-Americans off their hands. On Wall Street, directives issued from above are called "axes," and Goldman's upper management spent a great deal of the spring of 2007 "axing" Timberwolf. In a crucial conference call on May 20th that included Viniar, Sparks oversaw a PowerPoint presentation spelling out, in writing, that Goldman's mortgage desk was "most concerned" about Timberwolf and another CDO-squared deal. In a later e-mail, he offered an even more dire assessment of such deals: "There is real market-meltdown potential."
On May 22nd, two days after the conference call, Goldman sales rep George Maltezos urged the Australians at Basis to hurry up and buy what the bank knew was a deadly investment, suggesting that the "return on invested capital for Basis is over 60 percent." Maltezos was so stoked when he first identified the Aussies as a target in the scam that he subject-lined his e-mail "Utopia."
"I think," Maltezos wrote, "I found white elephant, flying pig and unicorn all at once."
The whole transaction can be summed up by the now-notorious e-mail that Montag wrote to Sparks only four days after they sold $100 million of Timberwolf to Basis. "Boy," Montag wrote, "that timeberwof [sic] was one shitty deal."
Last year, in the one significant regulatory action the government has won against the big banks, the SEC sued Goldman over a scam called Abacus, in which the bank "rented" its name to a billionaire hedge-fund viper to fleece investors out of more than $1 billion. Goldman agreed to pay $550 million to settle the suit, though no criminal charges were brought against the bank or its executives. But in light of the Levin report, that SEC action now looks woefully inadequate. Yes, it was a record fine — but it pales in comparison to the money Goldman has taken from the government since the crash. As Spitzer notes, Goldman's reaction was basically, "OK, we'll pay you $550 million to settle the Abacus case — that's a small price to pay for the $12.9 billion we got for the AIG bailout." Now, adds Spitzer, "everybody can just go home and pretend it was only $12.4 billion — and Goldman can smile all the way to the bank. The question is, now that we've seen this report, there are a bunch of story lines that seem to be at least as egregious as Abacus. Are they going to bring cases?"
Here is where the supporters of Goldman and other big banks will stand up and start wanding the air full of confusing terms like "scienter" and "loss causation" — legalese mumbo jumbo that attempts to convince the ignorantly enraged onlooker that, according to American law, these grotesque tales of grand theft and fraud you've just heard are actually more innocent than you think. Yes, they will say, it may very well be a prosecutable crime for a corner-store Arab to take $2 from a customer selling tap water as Perrier. But that does not mean it's a crime for Goldman Sachs to take $100 million from a foreign hedge fund doing the same thing! No, sir, not at all! Then you'll be told that the Supreme Court has been limiting corporate liability for fraud for decades, that in order to gain a conviction one must prove a conscious intent to deceive, that the 1976 ruling in Ernst and Ernst clearly states....
Leave all that aside for a moment. Though many legal experts agree there is a powerful argument that the Levin report supports a criminal charge of fraud, this stuff can keep the lawyers tied up for years. So let's move on to something much simpler. In the spring of 2010, about a year into his investigation, Sen. Levin hauled all of the principals from these rotten Goldman deals to Washington, made them put their hands on the Bible and take oaths just like normal people, and demanded that they explain themselves. The legal definition of financial fraud may be murky and complex, but everybody knows you can't lie to Congress.
"Article 18 of the United States Code, Section 1001," says Loyola University law professor Michael Kaufman. "There are statutes that prohibit perjury and obstruction of justice, but this is the federal statute that explicitly prohibits lying to Congress."
The law is simple: You're guilty if you "knowingly and willfully" make a "materially false, fictitious or fraudulent statement or representation." The punishment is up to five years in federal prison.
When Roger Clemens went to Washington and denied taking a shot of steroids in his ass, the feds indicted him — relying not on a year's worth of graphically self-incriminating e-mails, but chiefly on the testimony of a single individual who had been given a deal by the government. Yet the Justice Department has shown no such prosecutorial zeal since April 27th of last year, when the Goldman executives who oversaw the Timberwolf, Hudson and Abacus deals arrived on the Hill and one by one — each seemingly wearing the same mask of faint boredom and irritated condescension — sat before Levin's committee and dodged volleys of questions.
Before the hearing, even some of Levin's allies worried privately about his taking on Goldman and other powerful interests. The job, they said, was best left to professional prosecutors, people with experience building cases. "A senator's office is not an enormous repository of expertise," one former regulator told me. But in the case of this particular senator, that concern turned out to be misplaced. A Harvard-educated lawyer, Levin has a long record of using his subcommittee to spend a year or more carefully building cases that lead to criminal prosecutions. His 2003 investigation into abusive tax shelters led to 19 indictments of individuals at KPMG, while a 2006 probe fueled insider-trading charges against the notorious Wyly brothers, a pair of billionaire Texans who manipulated offshore investment trusts. The investigation of Goldman was an attempt to find out what went wrong in the years leading up to the financial crash, and the questioning of the bank's executives was not one of those for-the-cameras-only events where congressmen wing ad-libbed questions in search of sound bites. In the weeks leading up to the hearing, Levin's team carefully rehearsed the moment with committee members. They knew the possible answers that Goldman might give, and they were ready with specific counterquestions. What ensued looked more like a good old-fashioned courtroom grilling than a photo-op for grinning congressmen.
Sparks, who stepped down as Goldman's mortgage chief in 2008, cut a striking figure in his testimony. With his severe crew cut, deep-set eyes and jockish intransigence, he looked like a cross between H.R. Haldeman and John Rocker. He repeatedly dodged questions from Levin about whether or not the bank had a responsibility to tell its clients that it was betting against the same stuff it was selling them. When asked directly if he had that responsibility, Sparks answered, "The clients who did not want to participate in that deal did not." When Levin pressed him again, asking if he had a duty to disclose that Goldman had an "adverse interest" to the deals being sold to clients, Sparks fidgeted and pretended not to comprehend the question. "Mr. Chairman," he said, "I'm just trying to understand."
OK, fine — non-answer answers. "My guess is they were all pretty well coached up," says Kaufman, the law professor. But then Sparks had a revealing exchange with Sen. Jon Tester of Montana. Tester calls the Goldman deals "a wreck waiting to happen," noting that the CDOs "were all downgraded to junk in very short order."
At which point, Sparks replies, "Well, senator, at the time we did those deals, we expected those deals to perform."
Tester then cannily asks if by "perform," Sparks means go to shit — which would have been an honest answer. "Perform in what way?" Tester asks. "Perform to go to junk so that the shorts made out?"
Unable to resist the taunt, Sparks makes a fateful decision to defend his honor. "To not be downgraded to junk in that short a time frame," he says. Then he pauses and decides to dispense with the hedging phrase "in that short a time frame."
"In fact," Sparks says, "to not be downgraded to junk."
So Sparks goes before Congress and, under oath, tells a U.S. senator that at the time he was selling Timberwolf, he expected it to "perform." But an internal document he approved in May 2007 predicted exactly the opposite, warning that Goldman's mortgage desk expected such deals to "underperform." Here are some other terms that Sparks used in e-mails about the subprime market affecting deals like Timberwolf around that same time: "bad and getting worse," "get out of everything," "game over," "bad news everywhere" and "the business is totally dead."
And we indicted Roger Clemens?
Another extraordinary example of Goldman's penchant for truth avoidance came when Joshua Birnbaum, former head of structured-products trading for the bank, gave a deposition to Levin's committee. Asked point-blank if Goldman's huge "short" on mortgages was an intentional bet against the market or simply a "hedge" against potential losses, Birnbaum played dumb. "I do not know whether the shorts were a hedge," he said. But the committee, it turned out, already knew that Birnbaum had written a memo in which he had spelled out the truth: "The shorts were not a hedge." When Birnbaum's lawyers learned that their client's own words had been used against him, they hilariously sent an outraged letter complaining that Birnbaum didn't know the committee had his memo when he decided to dodge the question. They also submitted a "supplemental" answer. Birnbaum now said, "Having reviewed the document the staff did not previously provide me" — his own words! — "I can now recall that ... I believed ... these short positions were not a hedge." (Goldman, for its part, dismisses Birnbaum as a single trader who "neither saw nor knew the firm's overall risk positions.")
When it came time for Goldman CEO Lloyd Blankfein to testify, the banker hedged and stammered like a brain-addled boxer who couldn't quite follow the questions. When Levin asked how Blankfein felt about the fact that Goldman collected $13 billion from U.S. taxpayers through the AIG bailout, the CEO deflected over and over, insisting that Goldman would somehow have made that money anyway through its private insurance policies on AIG. When Levin pressed Blankfein, pointing out that he hadn't answered the question, Blankfein simply peered at Levin like he didn't understand.
But Blankfein also testified unequivocally to the following:
"Much has been said about the supposedly massive short Goldman Sachs had on the U.S. housing market. The fact is, we were not consistently or significantly net-short the market in residential mortgage-related products in 2007 and 2008. We didn't have a massive short against the housing market, and we certainly did not bet against our clients."
Levin couldn't believe what he was hearing. "Heck, yes, I was offended," he says. "Goldman's CEO claimed the firm 'didn't have a massive short,' when the opposite was true." First of all, in Goldman's own internal memoranda, the bank calls its giant, $13 billion bet against mortgages "the big short." Second, by the time Sparks and Co. were unloading the Timberwolves of the world on their "unicorns" and "flying pigs" in the summer of 2007, Goldman's mortgage department accounted for 54 percent of the bank's risk. That means more than half of all the bank's risk was wrapped up in its bet against the mortgage market — a "massive short" by any definition. Indeed, the bank was betting so much money on mortgages that its executives had become comically blasé about giant swings on a daily basis. When Goldman lost more than $100 million on August 8th, 2007, Montag circulated this e-mail: "So who lost the hundy?"
This month, after releasing his report, Levin sent all of this material to the Justice Department. His conclusion was simple. "In my judgment," he declared, "Goldman clearly misled their clients, and they misled the Congress." Goldman, unsurprisingly, disagreed: "Our testimony was truthful and accurate, and that applies to all of our testimony," said spokesman Michael DuVally. In a statement to Rolling Stone, Goldman insists that its behavior throughout the period covered in the Levin report was consistent with responsible business practice, and that its machinations in the mortgage market were simply an attempt to manage risk.
It wouldn't be hard for federal or state prosecutors to use the Levin report to make a criminal case against Goldman. I ask Eliot Spitzer what he would do if he were still attorney general and he saw the Levin report. "Once the steam stopped coming out of my ears, I'd be dropping so many subpoenas," he says. "And I would parse every potential inconsistency between the testimony they gave to Congress and the facts as we now understand them."
I ask what inconsistencies jump out at him. "They keep claiming they were only marginally short, that it was more just servicing their clients," he says. "But it sure doesn't look like that." He pauses. "They were $13 billion short. That's big — 50 percent of their risk. It was so completely disproportionate."
Lloyd Blankfein went to Washington and testified under oath that Goldman Sachs didn't make a massive short bet and didn't bet against its clients. The Levin report proves that Goldman spent the whole summer of 2007 riding a "big short" and took a multibillion-dollar bet against its clients, a bet that incidentally made them enormous profits. Are we all missing something? Is there some different and higher standard of triple- and quadruple-lying that applies to bank CEOs but not to baseball players?
This issue is bigger than what Goldman executives did or did not say under oath. The Levin report catalogs dozens of instances of business practices that are objectively shocking, no matter how any high-priced lawyer chooses to interpret them: gambling billions on the misfortune of your own clients, gouging customers on prices millions of dollars at a time, keeping customers trapped in bad investments even as they begged the bank to sell, plus myriad deceptions of the "failure to disclose" variety, in which customers were pitched investment deals without ever being told they were designed to help Goldman "clean" its bad inventory. For years, the soundness of America's financial system has been based on the proposition that it's a crime to lie in a prospectus or a sales brochure. But the Levin report reveals a bank gone way beyond such pathetic little boundaries; the collective picture resembles a financial version of The Jungle, a portrait of corporate sociopathy that makes you never want to go near a sausage again.
Upton Sinclair's narrative shocked the nation into a painful realization about the pervasive filth and corruption behind America's veneer of smart, robust efficiency. But Carl Levin's very similar tale probably will not. The fact that this evidence comes from a U.S. senator's office, and not the FBI or the SEC, is itself an element in the worsening tale of lawlessness and despotism that sparked a global economic meltdown. "Why should Carl Levin be the one who needs to do this?" asks Spitzer. "Where's the SEC? Where are any of the regulatory bodies?"
This isn't just a matter of a few seedy guys stealing a few bucks. This is America: Corporate stealing is practically the national pastime, and Goldman Sachs is far from the only company to get away with doing it. But the prominence of this bank and the high-profile nature of its confrontation with a powerful Senate committee makes this a political story as well. If the Justice Department fails to give the American people a chance to judge this case — if Goldman skates without so much as a trial — it will confirm once and for all the embarrassing truth: that the law in America is subjective, and crime is defined not by what you did, but by who you are.
The Murdoch Press (Dirty Little Digger and his Dirty Press)
Sorry but I do not like him John Pilger has been writing for years the truth of Australian Media and Political History.
How the Murdoch press keeps Australia's dirty secret
The illegal eavesdropping on famous people by the News of the World is said to be Rupert Murdoch’s Watergate. But is it the crime by which Murdoch ought to be known? In his native land, Australia, Murdoch controls 70 per cent of the capital city press. Australia is the world’s first murdochracy, in which smear by media is power.
The most enduring and insidious Murdoch campaign has been against the Aboriginal people, who were dispossessed by the arrival of the British in the late 18th century and have never been allowed to recover. “Nigger hunts” continued into the 1960s and beyond. The officially-inspired theft of children from Aboriginal families, justified by the racist theories of the eugenics movement, produced those known as the Stolen Generation and in 1997 was identified as genocide. Today, the first Australians have the shortest life expectancy of any of the world’s 90 indigenous peoples. Australia imprisons Aborigines at five times the rate South Africa during the apartheid years. In the state of Western Australia, the figure is eight times the apartheid rate.
Political power in Australia often rests in the control of resource-rich land. Most of the uranium, iron ore, gold, oil and natural gas is in Western Australia and Northern Territory – on Aboriginal land. Indeed, Aboriginal “progress” is all but defined by the mining industry and its political guardians in both Labor and coalition (conservative) governments. Their faithful, strident voice is the Murdoch press. The exceptional, reformist Labor government of Gough Whitlam in the 1970s set up a royal commission that made clear that social justice for Australia’s first people would only be achieved with universal land rights and a share the national wealth with dignity. In 1975, Whitlam was sacked by the governor-general in a “constitutional coup”. The Murdoch press had turned on Whitlam with such venom that rebellious journalists on The Australian burned their newspaper in the street.
In 1984, the Labor Party “solemnly pledged” to finish what Whitlam had begun and legislate Aboriginal land rights. This was opposed by the then Labor prime minister, Bob Hawke, a “mate” of Rupert Murdoch. Hawke blamed the public for being “less compassionate”; but a secret 64-page report to the party revealed that most Australians supported land rights. This was leaked to The Australian, whose front page declared, “Few support Aboriginal land rights”, the opposite of the truth, thus feeding an atmosphere of self-fulfilling distrust, “backlash” and rejection of rights that would distinguish Australia from South Africa. In 1988, an editorial in Murdoch’s London tabloid, the Sun, described “the Abos” as “treacherous and brutal”. This was condemned by the UK Press Council as “unacceptably racist”.
The Australian publishes long articles that present Aboriginal people not unsympathetically but as perennial victims of each other, “an entire culture committing suicide”, or as noble primitives requiring firm direction: the eugenicist’s view. It promotes Aboriginal “leaders” who, by blaming their own people for their poverty, tell the white elite what it wants to hear. The writer Michael Brull parodied this: “Oh White man, please save us. Take away our rights because we are so backward.”
This is also the government’s view. In railing against what it called the “black armband view” of Australia’s past, the conservative government of John Howard encouraged and absorbed the views of white supremacists -- that there was no genocide, no Stolen Generation, no racism; indeed, whites are the victims of “liberal racism”. A collection of far-right journalists, minor academics and hangers-on became the antipodean equivalent of David Irving Holocaust deniers. Their platform has been the Murdoch press.
Andrew Bolt, columnist on Murdoch’s Melbourne Herald-Sun tabloid, is currently the defendant in a racial vilification case brought by nine prominent Aborigines, including Larissa Behrendt, a professor of law and indigenous studies in Sydney. Behrendt has been an authoritative and outspoken opponent of Howard’s 2007 “emergency intervention” in the Northern Territory, which the Labor government of Julia Gillard has reinforced. The rationale to “intervene” was that child abuse among Aborigines was in “unthinkable numbers”. This was a fraud. Out of 7,433 Aboriginal children examined by doctors, four possible cases were identified – about the rate of child abuse in white Australia. What this covered was an old-fashioned colonial grab of mineral-rich land in the Northern Territory where Aboriginal land rights were granted in 1976.
The Murdoch press has been the most lurid and vociferous in its promotion of the “intervention”, which a United Nations special rapporteur has condemned for its racial discrimination. Once again, Australian politicians are dispossessing the first inhabitants, demanding leasehold of land in return for health and education rights that whites take for granted and driving them into “economically viable hubs” where they will be effectively detained -- a form of apartheid.
The outrage and despair of most Aboriginal people is not heard. For using her institutional voice and exposing the government’s black supporters, Larissa Behrendt has been subjected to a vicious campaign of innuendo in the Murdoch press, including the implication that she is not a “real” Aborigine. Using the language of its soulmate the London Sun, the Australian derides the “abstract debate” of “land rights, apologies, treaties” as a “moralizing mumbo-jumbo spreading like a virus”. The aim is to silence those who dare tell Australia’s dirty secret.
www.johnpilger.com
How the Murdoch press keeps Australia's dirty secret
The illegal eavesdropping on famous people by the News of the World is said to be Rupert Murdoch’s Watergate. But is it the crime by which Murdoch ought to be known? In his native land, Australia, Murdoch controls 70 per cent of the capital city press. Australia is the world’s first murdochracy, in which smear by media is power.
The most enduring and insidious Murdoch campaign has been against the Aboriginal people, who were dispossessed by the arrival of the British in the late 18th century and have never been allowed to recover. “Nigger hunts” continued into the 1960s and beyond. The officially-inspired theft of children from Aboriginal families, justified by the racist theories of the eugenics movement, produced those known as the Stolen Generation and in 1997 was identified as genocide. Today, the first Australians have the shortest life expectancy of any of the world’s 90 indigenous peoples. Australia imprisons Aborigines at five times the rate South Africa during the apartheid years. In the state of Western Australia, the figure is eight times the apartheid rate.
Political power in Australia often rests in the control of resource-rich land. Most of the uranium, iron ore, gold, oil and natural gas is in Western Australia and Northern Territory – on Aboriginal land. Indeed, Aboriginal “progress” is all but defined by the mining industry and its political guardians in both Labor and coalition (conservative) governments. Their faithful, strident voice is the Murdoch press. The exceptional, reformist Labor government of Gough Whitlam in the 1970s set up a royal commission that made clear that social justice for Australia’s first people would only be achieved with universal land rights and a share the national wealth with dignity. In 1975, Whitlam was sacked by the governor-general in a “constitutional coup”. The Murdoch press had turned on Whitlam with such venom that rebellious journalists on The Australian burned their newspaper in the street.
In 1984, the Labor Party “solemnly pledged” to finish what Whitlam had begun and legislate Aboriginal land rights. This was opposed by the then Labor prime minister, Bob Hawke, a “mate” of Rupert Murdoch. Hawke blamed the public for being “less compassionate”; but a secret 64-page report to the party revealed that most Australians supported land rights. This was leaked to The Australian, whose front page declared, “Few support Aboriginal land rights”, the opposite of the truth, thus feeding an atmosphere of self-fulfilling distrust, “backlash” and rejection of rights that would distinguish Australia from South Africa. In 1988, an editorial in Murdoch’s London tabloid, the Sun, described “the Abos” as “treacherous and brutal”. This was condemned by the UK Press Council as “unacceptably racist”.
The Australian publishes long articles that present Aboriginal people not unsympathetically but as perennial victims of each other, “an entire culture committing suicide”, or as noble primitives requiring firm direction: the eugenicist’s view. It promotes Aboriginal “leaders” who, by blaming their own people for their poverty, tell the white elite what it wants to hear. The writer Michael Brull parodied this: “Oh White man, please save us. Take away our rights because we are so backward.”
This is also the government’s view. In railing against what it called the “black armband view” of Australia’s past, the conservative government of John Howard encouraged and absorbed the views of white supremacists -- that there was no genocide, no Stolen Generation, no racism; indeed, whites are the victims of “liberal racism”. A collection of far-right journalists, minor academics and hangers-on became the antipodean equivalent of David Irving Holocaust deniers. Their platform has been the Murdoch press.
Andrew Bolt, columnist on Murdoch’s Melbourne Herald-Sun tabloid, is currently the defendant in a racial vilification case brought by nine prominent Aborigines, including Larissa Behrendt, a professor of law and indigenous studies in Sydney. Behrendt has been an authoritative and outspoken opponent of Howard’s 2007 “emergency intervention” in the Northern Territory, which the Labor government of Julia Gillard has reinforced. The rationale to “intervene” was that child abuse among Aborigines was in “unthinkable numbers”. This was a fraud. Out of 7,433 Aboriginal children examined by doctors, four possible cases were identified – about the rate of child abuse in white Australia. What this covered was an old-fashioned colonial grab of mineral-rich land in the Northern Territory where Aboriginal land rights were granted in 1976.
The Murdoch press has been the most lurid and vociferous in its promotion of the “intervention”, which a United Nations special rapporteur has condemned for its racial discrimination. Once again, Australian politicians are dispossessing the first inhabitants, demanding leasehold of land in return for health and education rights that whites take for granted and driving them into “economically viable hubs” where they will be effectively detained -- a form of apartheid.
The outrage and despair of most Aboriginal people is not heard. For using her institutional voice and exposing the government’s black supporters, Larissa Behrendt has been subjected to a vicious campaign of innuendo in the Murdoch press, including the implication that she is not a “real” Aborigine. Using the language of its soulmate the London Sun, the Australian derides the “abstract debate” of “land rights, apologies, treaties” as a “moralizing mumbo-jumbo spreading like a virus”. The aim is to silence those who dare tell Australia’s dirty secret.
Deadly Silence on Fukushima
I received the following email a few days ago from a Russian nuclear physicist friend who is an expert on the kinds of gases being released at Fukushima. Here is what he wrote:
About Japan: the problem is that the reactor uses "dirty" fuel. It is a combination of plutonium and uranium (MOX). I suspect that the old fuel rods have bean spread out due to the explosion and the surrounding area is contaminated with plutonium which means you can never return to this place again. It is like a new Tchernobyl. Personally, I am not surprised that the authority has not informed people about this.
I have been following the Fukushima story very closely since the earthquake and devastating tsunami. I have asked scientists I know, nuclear physicists and others about where they find real information. I have also watched as the news has virtually disappeared. There is something extremely disturbing going on, and having lived through the media blackout in France back in April and early May 1986, and speaking to doctors who are deeply concerned by the dramatic increase in cancers appearing at very young ages, it is obvious that information is being held back. We are still told not to eat mushrooms and truffles from parts of Europe, not wild boar and reindeer from Germany and Finland 25 years later.
A special thanks to people like European Representative Michele Rivasi, who has followed this issue since Chernobyl: Rivasi, a Green MEP and founder of France's Commission for Independent Research and Information on Radioactivity, told EurActiv that she was worried the tests would cover up nuclear risks and reinstate business as usual.
"It's very important to have scientists who are not already paid by the nuclear power industry," she said. "If they are the same people from Euratom and national authorities they use today, why would they say anything different to what they say all the time?"
One resource for information on Chernobyl deaths and cancers/illnesses was only just recently translated and can be found online: "Chernobyl: Consequences of the Catastrophe for People and the Environment" by Alexey Yablokov, Vassily Nesterenko, and Alexey Nesterenko.
Read More at Source
About Japan: the problem is that the reactor uses "dirty" fuel. It is a combination of plutonium and uranium (MOX). I suspect that the old fuel rods have bean spread out due to the explosion and the surrounding area is contaminated with plutonium which means you can never return to this place again. It is like a new Tchernobyl. Personally, I am not surprised that the authority has not informed people about this.
I have been following the Fukushima story very closely since the earthquake and devastating tsunami. I have asked scientists I know, nuclear physicists and others about where they find real information. I have also watched as the news has virtually disappeared. There is something extremely disturbing going on, and having lived through the media blackout in France back in April and early May 1986, and speaking to doctors who are deeply concerned by the dramatic increase in cancers appearing at very young ages, it is obvious that information is being held back. We are still told not to eat mushrooms and truffles from parts of Europe, not wild boar and reindeer from Germany and Finland 25 years later.
A special thanks to people like European Representative Michele Rivasi, who has followed this issue since Chernobyl: Rivasi, a Green MEP and founder of France's Commission for Independent Research and Information on Radioactivity, told EurActiv that she was worried the tests would cover up nuclear risks and reinstate business as usual.
"It's very important to have scientists who are not already paid by the nuclear power industry," she said. "If they are the same people from Euratom and national authorities they use today, why would they say anything different to what they say all the time?"
One resource for information on Chernobyl deaths and cancers/illnesses was only just recently translated and can be found online: "Chernobyl: Consequences of the Catastrophe for People and the Environment" by Alexey Yablokov, Vassily Nesterenko, and Alexey Nesterenko.
Wednesday, May 11, 2011
Planets at Dawn
I am a predawn walker and feel in awe of the universe especially when I see planets in alinement as is visible now.
Source
Thursday, April 28, 2011
Your Real Government
Wow this dude has put it altogether for us
Naming Names: Your Real Government
When dark deeds unfold, point the finger in this direction.
This is your real government; they transcend elected administrations, they permeate every political party, and they are responsible for nearly every aspect of the average American and European's way of life. When the "left" is carrying the torch for two "Neo-Con" wars, starting yet another based on the same lies, peddled by the same media outlets that told of Iraqi WMD's, the world has no choice, beyond profound cognitive dissonance, but to realize something is wrong.
What's wrong is a system completely controlled by a corporate-financier oligarchy with financial, media, and industrial empires that span the globe. If we do not change the fact that we are helplessly dependent on these corporations that regulate every aspect of our nation politically, and every aspect of our lives personally, nothing else will ever change.
http://www.blogger.com/post-create.g?blogID=29500801
The following list, however extensive, is by far not all-inclusive.
More at Source
Naming Names: Your Real Government
When dark deeds unfold, point the finger in this direction.
This is your real government; they transcend elected administrations, they permeate every political party, and they are responsible for nearly every aspect of the average American and European's way of life. When the "left" is carrying the torch for two "Neo-Con" wars, starting yet another based on the same lies, peddled by the same media outlets that told of Iraqi WMD's, the world has no choice, beyond profound cognitive dissonance, but to realize something is wrong.
What's wrong is a system completely controlled by a corporate-financier oligarchy with financial, media, and industrial empires that span the globe. If we do not change the fact that we are helplessly dependent on these corporations that regulate every aspect of our nation politically, and every aspect of our lives personally, nothing else will ever change.
http://www.blogger.com/post-create.g?blogID=29500801
The following list, however extensive, is by far not all-inclusive.
FUKUSHIMA = 2,000 Atomic Bombs
Killer Contamination Spreads Worldwide Without Opposition
(San Francisco) – Radioactive contamination equivalent to the Fukushima, Japan disaster in terms of the hated “Mushroom Cloud” Atomic Bombs is two thousand (2,000) 500 Kiloton Atomic Bombs.* Each 500kt Atomic Bomb is 33 times bigger than the American Bomb that destroyed Hiroshima on August 6, 1945.
Source
Follow the Links - surprising information or NOT
(San Francisco) – Radioactive contamination equivalent to the Fukushima, Japan disaster in terms of the hated “Mushroom Cloud” Atomic Bombs is two thousand (2,000) 500 Kiloton Atomic Bombs.* Each 500kt Atomic Bomb is 33 times bigger than the American Bomb that destroyed Hiroshima on August 6, 1945.
Follow the Links - surprising information or NOT
Monday, April 25, 2011
US atrocities reach all time high in Afghanistan
"The purpose for which Afghanistan was invaded — to secure safe passage for a gas and oil pipeline from Central Asia and lay hands on the rich mineral deposits of Afghanistan — has not been achieved so far. Yet there is growing anxiety among ordinary Americans over the extended military mission that has nearly bankrupted America. Unemployment is high, the debt is rising and American cities are crumbling while the US pours billions of dollars into a war that appears to have no end or any identifiable benchmarks by which to measure progress. US officials talk optimistically about training Afghan police and army but the targets they have set have not been met so far."
Even as American officials optimistically talk about starting troop withdrawal from Afghanistan according to schedule in July, news about their atrocities continue to send shock waves globally. Recent reports and photos of torture and mutilation of Afghan civilians make Abu Ghraib look like a mild affair. These crimes are compounded by denials that the Americans have done or are capable of doing anything wrong since these are contrary to American “standards and values.” Their victims know better.
This past winter, American troops murdered even more Afghan civilians than in previous years. And true to form, they routinely claim the attacks were aimed at militants and that no civilians were killed. There has been a spate of such attacks in recent weeks that have soured relations between the US military and the Afghan government. To their customary brutality, the Americans have now added another tactic. Following a particularly gruesome attack in Ghaziabad district of Kunar province in late February, General David Petraeus said Afghan civilians had “deliberately burnt” their children’s legs and arms to make the attack look bad.
“I was dizzy. My head was spinning,” said an aide to Afghan President Hamid Karzai, referring to Petraeus’s remarks, during a meeting. “This was shocking. Would any father do this to his [own] children? This is really absurd.” Fazlullah Wahidi, governor of Kunar province, said at least 50 women and children perished in the attack carried out by US Apache helicopters. While the dust had not settled over this incident, NATO air strikes killed another nine children on March 1. Again, the Americans initially claimed these were insurgents. Later they apologized when it was confirmed that these were boys collecting wood in the mountains. Gates apologized for the attacks as did Obama. A day earlier, Afghans had demonstrated in Kabul against such attacks and Karzai angrily rejected an apology from Petraeus.
During a visit to Asadabad, capital of Kunar province on March 11, Karzai said NATO and the US should stop their operations in Afghanistan. “I ask NATO and US, with honor and humbleness and not with arrogance, to stop its operations on our soil,” Karzai said. The children were between the ages of 7 and 13 and collecting firewood in the Manogay district when they came under bombardment. “Afghans want peace and security and they cooperate with the world to bring peace and security,” Karzai said. “But we don’t want this war to continue any longer. We don’t want to repeat such bombardments and casualties.” The Americans have paid no attention to such appeals in the past; they are not likely to pay heed now and will dismiss them with contempt, regardless of how much suffering they cause.
Meanwhile, there was even more shocking news when the German weekly, Dier Spiegel on March 20 published photos of Afghan civilians killed by US soldiers and then posed with their naked bodies. The London daily, the Guardian, compared them to the photos of detainees tortured and humiliated in Iraq’s notorious Abu Ghraib prison. The British daily reported “commanders in Afghanistan are bracing themselves for possible riots and public fury triggered by the publication of ‘trophy’ photographs of US soldiers posing with the dead bodies of defenceless Afghan civilians they killed” (March 21). Some senior NATO officials have expressed fears the pictures could be even more damaging as they show the aftermath of deliberate murders of Afghan civilians by a rogue US Stryker tank unit that operated in the southern province of Qandahar last year.
Some of the activities of the American “kill team” are already public knowledge; 12 men are currently on trial in Seattle for their role in the killing of three civilians. Five soldiers are on trial for pre-meditated murder, after they staged killings to make it look like they were defending themselves against Taliban attacks. Other charges include the mutilation of corpses, the possession of images of human casualties and drug abuse. Other soldiers cut body parts of victims as “trophies”. The Dier Spiegel report says there are approximately 4,000 photos and videos taken by the men.
True to form, the US military has tried to keep the photos out of the public domain fearing it could damage its already tarnished reputation, especially in Afghanistan and Pakistan where anti-American sentiment is running very high. Also typically, the US army apologized for the distress caused by photographs “depicting actions repugnant to us as human beings and contrary to the standards and values of the United States.” But such actions by US soldiers are so routine that it is mind-boggling for the US army to claim these run contrary to their “standards and values.” These are precisely the standards of the US from Bagram and Abu Ghraib to Guantanamo Bay. The latest batch of photos simply confirms a pattern of behaviour common among US soldiers, crossing all limits of human decency and dignity. Not surprisingly, the vast majority of Afghans and people elsewhere, look upon Americans with disgust and wish to have nothing to do with them.
Dier Spiegel also narrates another episode that occurred last May. An Afghan religious leader, standing by the road perhaps waiting for a ride, was apprehended by the “kill team”, taken to a ditch and made to kneel down. The staff sergeant, one Calvin Gibbs, then threw a grenade at the man while an order was given for him to be shot. As if this was not enough, Gibbs then cut the man’s little finger and pulled one of his teeth out.
With the publication of Dier Spiegel’s report and photos, many organizations that employ foreign staff, including the United Nations, ordered their staff into a “lockdown”, banning all movements around Kabul and requiring people to remain in their compounds. One security manager for the US company DynCorp sent an email to clients warning that publication of the photos was likely “to incite the local population” as the “severity of the incidents to be revealed are graphic and extreme.”
The Americans do not wish to improve their manners. After each act of barbarism that exceeds their previous atrocious behaviour, they put out a press release dismissing the incident as not in accord with American standards and values. What precisely are these values the Americans are so eager to export to the rest of the world through cruise missiles and “kill teams”?
Amid reports of American crimes against humanity, a debate is raging in the official circles whether they are staying in Afghanistan or leaving? They appear to be speaking from both sides of their mouth. The purpose for which Afghanistan was invaded — to secure safe passage for a gas and oil pipeline from Central Asia and lay hands on the rich mineral deposits of Afghanistan — has not been achieved so far. Yet there is growing anxiety among ordinary Americans over the extended military mission that has nearly bankrupted America. Unemployment is high, the debt is rising and American cities are crumbling while the US pours billions of dollars into a war that appears to have no end or any identifiable benchmarks by which to measure progress. US officials talk optimistically about training Afghan police and army but the targets they have set have not been met so far.
During an unannounced visit to Kabul on March 7, US Defence Secretary Robert Gates said the US was “well-positioned” to begin withdrawing troops from Afghanistan in July. This was the date President Barack Obama had set on December 1, 2009 when he announced a 30,000-troop surge for Afghanistan. But Gates also said the US would remain involved in Afghanistan even after the 2014 date, when the withdrawal of troops is scheduled to be completed. American officials always leave caveats so that they have wiggle room to manouvre and implement whatever policy they want.
But their atrocious behaviour is turning even ordinary Afghans against them. They wish to have nothing to do with the Americans, their hi-tech weapons and their dollars. They would rather be left alone to their poverty-stricken but safe life, free from Hell-fire missiles and Apache helicopter attacks.
Global Research Articles by Zia Sarhadi
Source
Even as American officials optimistically talk about starting troop withdrawal from Afghanistan according to schedule in July, news about their atrocities continue to send shock waves globally. Recent reports and photos of torture and mutilation of Afghan civilians make Abu Ghraib look like a mild affair. These crimes are compounded by denials that the Americans have done or are capable of doing anything wrong since these are contrary to American “standards and values.” Their victims know better.
This past winter, American troops murdered even more Afghan civilians than in previous years. And true to form, they routinely claim the attacks were aimed at militants and that no civilians were killed. There has been a spate of such attacks in recent weeks that have soured relations between the US military and the Afghan government. To their customary brutality, the Americans have now added another tactic. Following a particularly gruesome attack in Ghaziabad district of Kunar province in late February, General David Petraeus said Afghan civilians had “deliberately burnt” their children’s legs and arms to make the attack look bad.
“I was dizzy. My head was spinning,” said an aide to Afghan President Hamid Karzai, referring to Petraeus’s remarks, during a meeting. “This was shocking. Would any father do this to his [own] children? This is really absurd.” Fazlullah Wahidi, governor of Kunar province, said at least 50 women and children perished in the attack carried out by US Apache helicopters. While the dust had not settled over this incident, NATO air strikes killed another nine children on March 1. Again, the Americans initially claimed these were insurgents. Later they apologized when it was confirmed that these were boys collecting wood in the mountains. Gates apologized for the attacks as did Obama. A day earlier, Afghans had demonstrated in Kabul against such attacks and Karzai angrily rejected an apology from Petraeus.
During a visit to Asadabad, capital of Kunar province on March 11, Karzai said NATO and the US should stop their operations in Afghanistan. “I ask NATO and US, with honor and humbleness and not with arrogance, to stop its operations on our soil,” Karzai said. The children were between the ages of 7 and 13 and collecting firewood in the Manogay district when they came under bombardment. “Afghans want peace and security and they cooperate with the world to bring peace and security,” Karzai said. “But we don’t want this war to continue any longer. We don’t want to repeat such bombardments and casualties.” The Americans have paid no attention to such appeals in the past; they are not likely to pay heed now and will dismiss them with contempt, regardless of how much suffering they cause.
Meanwhile, there was even more shocking news when the German weekly, Dier Spiegel on March 20 published photos of Afghan civilians killed by US soldiers and then posed with their naked bodies. The London daily, the Guardian, compared them to the photos of detainees tortured and humiliated in Iraq’s notorious Abu Ghraib prison. The British daily reported “commanders in Afghanistan are bracing themselves for possible riots and public fury triggered by the publication of ‘trophy’ photographs of US soldiers posing with the dead bodies of defenceless Afghan civilians they killed” (March 21). Some senior NATO officials have expressed fears the pictures could be even more damaging as they show the aftermath of deliberate murders of Afghan civilians by a rogue US Stryker tank unit that operated in the southern province of Qandahar last year.
Some of the activities of the American “kill team” are already public knowledge; 12 men are currently on trial in Seattle for their role in the killing of three civilians. Five soldiers are on trial for pre-meditated murder, after they staged killings to make it look like they were defending themselves against Taliban attacks. Other charges include the mutilation of corpses, the possession of images of human casualties and drug abuse. Other soldiers cut body parts of victims as “trophies”. The Dier Spiegel report says there are approximately 4,000 photos and videos taken by the men.
True to form, the US military has tried to keep the photos out of the public domain fearing it could damage its already tarnished reputation, especially in Afghanistan and Pakistan where anti-American sentiment is running very high. Also typically, the US army apologized for the distress caused by photographs “depicting actions repugnant to us as human beings and contrary to the standards and values of the United States.” But such actions by US soldiers are so routine that it is mind-boggling for the US army to claim these run contrary to their “standards and values.” These are precisely the standards of the US from Bagram and Abu Ghraib to Guantanamo Bay. The latest batch of photos simply confirms a pattern of behaviour common among US soldiers, crossing all limits of human decency and dignity. Not surprisingly, the vast majority of Afghans and people elsewhere, look upon Americans with disgust and wish to have nothing to do with them.
Dier Spiegel also narrates another episode that occurred last May. An Afghan religious leader, standing by the road perhaps waiting for a ride, was apprehended by the “kill team”, taken to a ditch and made to kneel down. The staff sergeant, one Calvin Gibbs, then threw a grenade at the man while an order was given for him to be shot. As if this was not enough, Gibbs then cut the man’s little finger and pulled one of his teeth out.
With the publication of Dier Spiegel’s report and photos, many organizations that employ foreign staff, including the United Nations, ordered their staff into a “lockdown”, banning all movements around Kabul and requiring people to remain in their compounds. One security manager for the US company DynCorp sent an email to clients warning that publication of the photos was likely “to incite the local population” as the “severity of the incidents to be revealed are graphic and extreme.”
The Americans do not wish to improve their manners. After each act of barbarism that exceeds their previous atrocious behaviour, they put out a press release dismissing the incident as not in accord with American standards and values. What precisely are these values the Americans are so eager to export to the rest of the world through cruise missiles and “kill teams”?
Amid reports of American crimes against humanity, a debate is raging in the official circles whether they are staying in Afghanistan or leaving? They appear to be speaking from both sides of their mouth. The purpose for which Afghanistan was invaded — to secure safe passage for a gas and oil pipeline from Central Asia and lay hands on the rich mineral deposits of Afghanistan — has not been achieved so far. Yet there is growing anxiety among ordinary Americans over the extended military mission that has nearly bankrupted America. Unemployment is high, the debt is rising and American cities are crumbling while the US pours billions of dollars into a war that appears to have no end or any identifiable benchmarks by which to measure progress. US officials talk optimistically about training Afghan police and army but the targets they have set have not been met so far.
During an unannounced visit to Kabul on March 7, US Defence Secretary Robert Gates said the US was “well-positioned” to begin withdrawing troops from Afghanistan in July. This was the date President Barack Obama had set on December 1, 2009 when he announced a 30,000-troop surge for Afghanistan. But Gates also said the US would remain involved in Afghanistan even after the 2014 date, when the withdrawal of troops is scheduled to be completed. American officials always leave caveats so that they have wiggle room to manouvre and implement whatever policy they want.
But their atrocious behaviour is turning even ordinary Afghans against them. They wish to have nothing to do with the Americans, their hi-tech weapons and their dollars. They would rather be left alone to their poverty-stricken but safe life, free from Hell-fire missiles and Apache helicopter attacks.
Global Research Articles by Zia Sarhadi
Japan Nuclear Radiation Update
FYI - he is a great blogger go to the link for information
As previously posted, Lucas Hixton Whitefield tipped us off to the fact that the EPA has been detecting Plutonium and Strontium along the entire US West Coast since March 18th.
The discovery came after Lucas found that the advanced custom EPA Radnet data search contained several radioactive isotopes that the EPA was presenting to the public as the all inclusive list of Radiation being detected.
Using the advanced search I pulled all of the rainwater tests which are listed below showing dozens of cities with iodine radiation in the rainwater across the entire US with levels far above the EPA drinking water limit.
Source
As previously posted, Lucas Hixton Whitefield tipped us off to the fact that the EPA has been detecting Plutonium and Strontium along the entire US West Coast since March 18th.
The discovery came after Lucas found that the advanced custom EPA Radnet data search contained several radioactive isotopes that the EPA was presenting to the public as the all inclusive list of Radiation being detected.
Using the advanced search I pulled all of the rainwater tests which are listed below showing dozens of cities with iodine radiation in the rainwater across the entire US with levels far above the EPA drinking water limit.
Saturday, April 23, 2011
Economic Decline In America
I have posted this before now it has been updated
The United States is in the middle of a devastating long-term economic decline and it is getting really hard to deny it. Over the past year I have included literally thousands of depressing statistics in my articles about the U.S. economy. I have done this in order to make an overwhelming case that the U.S. economy is in deep decline and is dying a little bit more every single day. Until we understand exactly how bad our problems are we will never be willing to accept the solutions. The truth is that our leaders have absolutely wrecked the greatest economic machine that the world has ever seen. Most Americans just assume that we will always experience overwhelming prosperity, but that is not anywhere close to the truth. We are not guaranteed anything. Our manufacturing base has been gutted, the number of jobs is declining, more Americans are dependent on government handouts than ever before, our dollar is dying and as a nation we are absolutely drowning in debt. The economists that are trumpeting an "economic recovery" and that are declaring that the U.S. economy will soon be "better than ever" are delusional. We really are steamrolling toward a complete and total economic collapse and our leaders are doing nothing to stop it.
The following are 24 more signs of economic decline in America. Hopefully you will not get too depressed as you read them....
#1 On Monday, Standard & Poor’s altered its outlook on U.S. government debt from "stable" to "negative" and warned the U.S. that it could soon lose its AAA rating. This is yet another sign that the rest of the world is losing faith in the U.S. dollar and in U.S. Treasuries.
#2 China has announced that they are going to be reducing their holdings of U.S. dollars. In fact, there are persistent rumors that this has already been happening.
#3 Hedge fund manager Dennis Gartman says that "panic dollar selling is setting in" and that the U.S. dollar could be in for a huge decline.
#4 The biggest bond fund in the world, PIMCO, is now shorting U.S. government bonds.
#5 This cruel economy is causing "ghost towns" to appear all across the United States. There are quite a few counties across the nation that now have home vacancy rates of over 50%.
#6 There are now about 7.25 million less jobs in America than when the recession began back in 2007.
#7 The average American family is having a really tough time right now. Only 45.4% of Americans had a job during 2010. The last time the employment level was that low was back in 1983.
#8 Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
#9 According to a new report from the AFL-CIO, the average CEO made 343 times more money than the average American did last year.
#10 Gas prices reached five dollars per gallon at a gas station in Washington, DC on April 19th, 2011. Could we see $6 gas soon?
#11 Over the past 12 months the average price of gasoline in the United States has gone up by about 30%.
#12 Due to rising fuel prices, American Airlines lost a staggering $436 million during the first quarter of 2011.
#13 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.
#14 Approximately one out of every four dollars that the U.S. government borrows goes to pay the interest on the national debt.
#15 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
#16 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.
#17 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income.
#18 The average American now spends approximately 23 percent of his or her income on food and gas.
#19 In a recent survey conducted by Deloitte Consulting, 74 percent of Americans said that they planned to slow down their spending in coming months due to rising prices.
#20 59 percent of all Americans now receive money from the federal government in one form or another.
#21 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.
#22 As the economy continues to collapse, frustration among young people will continue to grow and we will see more seemingly "random acts of violence". One shocking example of this happened in the Atlanta area recently. The following is how a local Atlanta newspaper described the attack....
Roughly two dozen teens, chanting the name of a well-known Atlanta gang, brought mob rule to MARTA early Sunday morning, overwhelming nervous passengers and assaulting two Delta flight attendants.
Source
The United States is in the middle of a devastating long-term economic decline and it is getting really hard to deny it. Over the past year I have included literally thousands of depressing statistics in my articles about the U.S. economy. I have done this in order to make an overwhelming case that the U.S. economy is in deep decline and is dying a little bit more every single day. Until we understand exactly how bad our problems are we will never be willing to accept the solutions. The truth is that our leaders have absolutely wrecked the greatest economic machine that the world has ever seen. Most Americans just assume that we will always experience overwhelming prosperity, but that is not anywhere close to the truth. We are not guaranteed anything. Our manufacturing base has been gutted, the number of jobs is declining, more Americans are dependent on government handouts than ever before, our dollar is dying and as a nation we are absolutely drowning in debt. The economists that are trumpeting an "economic recovery" and that are declaring that the U.S. economy will soon be "better than ever" are delusional. We really are steamrolling toward a complete and total economic collapse and our leaders are doing nothing to stop it.
The following are 24 more signs of economic decline in America. Hopefully you will not get too depressed as you read them....
#1 On Monday, Standard & Poor’s altered its outlook on U.S. government debt from "stable" to "negative" and warned the U.S. that it could soon lose its AAA rating. This is yet another sign that the rest of the world is losing faith in the U.S. dollar and in U.S. Treasuries.
#2 China has announced that they are going to be reducing their holdings of U.S. dollars. In fact, there are persistent rumors that this has already been happening.
#3 Hedge fund manager Dennis Gartman says that "panic dollar selling is setting in" and that the U.S. dollar could be in for a huge decline.
#4 The biggest bond fund in the world, PIMCO, is now shorting U.S. government bonds.
#5 This cruel economy is causing "ghost towns" to appear all across the United States. There are quite a few counties across the nation that now have home vacancy rates of over 50%.
#6 There are now about 7.25 million less jobs in America than when the recession began back in 2007.
#7 The average American family is having a really tough time right now. Only 45.4% of Americans had a job during 2010. The last time the employment level was that low was back in 1983.
#8 Only 66.8% of American men had a job last year. That was the lowest level that has ever been recorded in all of U.S. history.
#9 According to a new report from the AFL-CIO, the average CEO made 343 times more money than the average American did last year.
#10 Gas prices reached five dollars per gallon at a gas station in Washington, DC on April 19th, 2011. Could we see $6 gas soon?
#11 Over the past 12 months the average price of gasoline in the United States has gone up by about 30%.
#12 Due to rising fuel prices, American Airlines lost a staggering $436 million during the first quarter of 2011.
#13 U.S. households are now receiving more income from the U.S. government than they are paying to the government in taxes.
#14 Approximately one out of every four dollars that the U.S. government borrows goes to pay the interest on the national debt.
#15 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.
#16 Total credit card debt in the United States is now more than 8 times larger than it was just 30 years ago.
#17 Average household debt in the United States has now reached a level of 136% of average household income. In China, average household debt is only 17% of average household income.
#18 The average American now spends approximately 23 percent of his or her income on food and gas.
#19 In a recent survey conducted by Deloitte Consulting, 74 percent of Americans said that they planned to slow down their spending in coming months due to rising prices.
#20 59 percent of all Americans now receive money from the federal government in one form or another.
#21 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.
#22 As the economy continues to collapse, frustration among young people will continue to grow and we will see more seemingly "random acts of violence". One shocking example of this happened in the Atlanta area recently. The following is how a local Atlanta newspaper described the attack....
Roughly two dozen teens, chanting the name of a well-known Atlanta gang, brought mob rule to MARTA early Sunday morning, overwhelming nervous passengers and assaulting two Delta flight attendants.
Beware of the Great Silver Correction
There seems to be a big debate going on now about silver going up too far, too fast. Paper money traitors traders have tried to call the silver top all the way up and have had their heads handed to them by the market. Technical analysts have called for pull backs based off of some squiggly lines on their computer screens. Even Academy members, who get the idea of owning real physical silver, have been asking me about keeping some “powder dry” for the correction.
Source
Friday, April 22, 2011
Julian Assange wins Archy
This is so funny
A painting of Julian Assange taking a leak has won this year’s Bald Archy prize.
The caricature by French artist Xavier Ghazi portrays the WikiLeaks founder with his trousers around his ankles, urinating into a top hat with the US flag on it.
The Bald Archy - a parody of the Archibald Prize for portraiture - is a competition of humorous works of art, making fun of Australian celebrities and politicians. The exhibition and prize is advertised as the only one in the world judged by a sulphur-crested cockatoo named Maude.
Source
The caricature by French artist Xavier Ghazi portrays the WikiLeaks founder with his trousers around his ankles, urinating into a top hat with the US flag on it.
The Bald Archy - a parody of the Archibald Prize for portraiture - is a competition of humorous works of art, making fun of Australian celebrities and politicians. The exhibition and prize is advertised as the only one in the world judged by a sulphur-crested cockatoo named Maude.
Nuclear weather worsens
(NaturalNews) Every day the news gets worse. Today it was robots telling us that radiation is so hot inside the nuclear plant in Japan that workers will have a hard to impossible time to work in certain areas to recover the plant from worst case scenarios. Radiation levels are just heading up across the board and across continents. Sunday morning the news was so bad that I didn't know what to do or write.
I could try screaming but I am not the type...or crying, well that comes almost too easily. Perhaps I am crazy. After all, Ann Coulter got on TV and actually said, "The only good news is that anyone exposed to excess radiation from the nuclear power plants is now probably much less likely to get cancer." And Dr. Josef Oehmen, a research scientist at MIT, said, "I repeat, there was and will *not* be any significant release of radioactivity from the damaged Japanese reactors."
Learn more
I could try screaming but I am not the type...or crying, well that comes almost too easily. Perhaps I am crazy. After all, Ann Coulter got on TV and actually said, "The only good news is that anyone exposed to excess radiation from the nuclear power plants is now probably much less likely to get cancer." And Dr. Josef Oehmen, a research scientist at MIT, said, "I repeat, there was and will *not* be any significant release of radioactivity from the damaged Japanese reactors."
Tuesday, April 19, 2011
Japan Tsunami Fukushima Nuclear Disaster
Not sure about this woman but a lot of what she says makes sense - as always for your own discernment
'Goldman Sachs Profited From Financial Crisis'
A two-year investigation says the investment bank deceived investors and Congress about its bets against the subprime mortgage market.
After a two-year bipartisan probe, a Senate panel has concluded that Goldman Sachs Group Inc. profited from the financial crisis by betting billions against the subprime mortgage market, then deceived investors and Congress about the firm's conduct.
Some of the findings in the report by the Senate's Permanent Subcommittee on Investigations will be referred to the Justice Department and the Securities and Exchange Commission for possible criminal or civil action, said Sen. Carl Levin (D-Mich.), the panel's chairman.
"In my judgment, Goldman clearly misled their clients and they misled the Congress," Levin told reporters before the report was made public late Wednesday.
Goldman said it disagreed with many of the subcommittee's conclusions and denied its executives misled Congress. The firm agreed last year to pay $550 million to settle a civil fraud case brought by the SEC regarding its actions in the market for mortgage securities. The latest allegations go beyond the conduct covered by the SEC suit.
The giant investment bank was just one focus of the subcommittee's probe into Wall Street's role in the financial crisis. The 639-page report - based on internal memos, emails and interviews with employees of financial firms and regulators - casts broad blame, saying the crisis was caused by "conflicts of interest, heedless risk-taking and failures of federal oversight."
"It shows without a doubt the lack of ethics in some of our financial institutions," said Sen. Tom Coburn (R-Okla.), the subcommittee's top Republican, who approved the report along with Levin.
Among the culprits cited by the panel are Washington Mutual, a major mortgage lender that failed in 2008, as well as the Office of Thrift Supervision, a federal bank regulator, and credit rating firms. The report makes 19 recommendations about how to prevent a future crisis, many of which were adopted in last year's overhaul of financial rules.
The subcommittee's conclusions about the cause of the crisis are similar to those of the Financial Crisis Inquiry Commission created by Congress. But that body's findings were marred by an inability to reach bipartisan consensus.
Much of the report centers on Goldman, whose executives were called before the committee last year for an intensive grilling. Levin was one of the chief inquisitors at that hearing and has been outspoken about Goldman's role in the crisis.
"Goldman was, I think, the only major bank that did well during the recession. We tried to find out, 'How is it they did well?' " Levin said Wednesday. "The tactics that they used … were disgraceful. And sticking it to their own clients violates their own claim that the clients come first."
Asked if he was disappointed that no Wall Street figures had gone to jail in connection with the crisis, Levin responded, "There's still time."
The report could be damaging for Goldman, particularly if it results in fresh charges against the firm. But from a public relations point of view, it's unclear whether the latest allegations will be seen as significant revelations.
"Everyone already kind of has a feeling that whatever the report stipulates, that Goldman has already done that," said Morningstar Inc. bank analyst Michael Wong. "They've already been put through the wringer."
One of the report's main allegations against Goldman was that it deceived clients who bought its mortgage-related securities, failing to tell those investors the firm was betting against those investments at the same time.
The SEC suit that Goldman settled last year alleged that the firm had misled investors in a complex mortgage-related security known as Abacus. The Senate report cites three similar securities that it said Goldman betted against, or shorted, without informing its clients.
The report also says Goldman Chief Executive Lloyd Blankfein and other executives misled the subcommittee when they appeared before the subcommittee last April and testified that the investment bank had not consistently tilted its own investments heavily against the housing market - a position known as being "net short."
The subcommittee has estimated that in 2007 Goldman's bets against the mortgage markets more than balanced out the bank's mortgage losses and led to a $1.2-billion profit in the mortgage department alone that year.
Goldman was so focused on shorting the market it even tried a strategy called a "short squeeze" to drive down the price of obtaining short positions, the report said.
In a statement issued Wednesday, Goldman said that during the subcommittee's hearing last year, its executives "repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point."
But the subcommittee report says such denials by Goldman "are directly contradicted by its own financial records and internal communications."
Source
After a two-year bipartisan probe, a Senate panel has concluded that Goldman Sachs Group Inc. profited from the financial crisis by betting billions against the subprime mortgage market, then deceived investors and Congress about the firm's conduct.
Some of the findings in the report by the Senate's Permanent Subcommittee on Investigations will be referred to the Justice Department and the Securities and Exchange Commission for possible criminal or civil action, said Sen. Carl Levin (D-Mich.), the panel's chairman.
"In my judgment, Goldman clearly misled their clients and they misled the Congress," Levin told reporters before the report was made public late Wednesday.
Goldman said it disagreed with many of the subcommittee's conclusions and denied its executives misled Congress. The firm agreed last year to pay $550 million to settle a civil fraud case brought by the SEC regarding its actions in the market for mortgage securities. The latest allegations go beyond the conduct covered by the SEC suit.
The giant investment bank was just one focus of the subcommittee's probe into Wall Street's role in the financial crisis. The 639-page report - based on internal memos, emails and interviews with employees of financial firms and regulators - casts broad blame, saying the crisis was caused by "conflicts of interest, heedless risk-taking and failures of federal oversight."
"It shows without a doubt the lack of ethics in some of our financial institutions," said Sen. Tom Coburn (R-Okla.), the subcommittee's top Republican, who approved the report along with Levin.
Among the culprits cited by the panel are Washington Mutual, a major mortgage lender that failed in 2008, as well as the Office of Thrift Supervision, a federal bank regulator, and credit rating firms. The report makes 19 recommendations about how to prevent a future crisis, many of which were adopted in last year's overhaul of financial rules.
The subcommittee's conclusions about the cause of the crisis are similar to those of the Financial Crisis Inquiry Commission created by Congress. But that body's findings were marred by an inability to reach bipartisan consensus.
Much of the report centers on Goldman, whose executives were called before the committee last year for an intensive grilling. Levin was one of the chief inquisitors at that hearing and has been outspoken about Goldman's role in the crisis.
"Goldman was, I think, the only major bank that did well during the recession. We tried to find out, 'How is it they did well?' " Levin said Wednesday. "The tactics that they used … were disgraceful. And sticking it to their own clients violates their own claim that the clients come first."
Asked if he was disappointed that no Wall Street figures had gone to jail in connection with the crisis, Levin responded, "There's still time."
The report could be damaging for Goldman, particularly if it results in fresh charges against the firm. But from a public relations point of view, it's unclear whether the latest allegations will be seen as significant revelations.
"Everyone already kind of has a feeling that whatever the report stipulates, that Goldman has already done that," said Morningstar Inc. bank analyst Michael Wong. "They've already been put through the wringer."
One of the report's main allegations against Goldman was that it deceived clients who bought its mortgage-related securities, failing to tell those investors the firm was betting against those investments at the same time.
The SEC suit that Goldman settled last year alleged that the firm had misled investors in a complex mortgage-related security known as Abacus. The Senate report cites three similar securities that it said Goldman betted against, or shorted, without informing its clients.
The report also says Goldman Chief Executive Lloyd Blankfein and other executives misled the subcommittee when they appeared before the subcommittee last April and testified that the investment bank had not consistently tilted its own investments heavily against the housing market - a position known as being "net short."
The subcommittee has estimated that in 2007 Goldman's bets against the mortgage markets more than balanced out the bank's mortgage losses and led to a $1.2-billion profit in the mortgage department alone that year.
Goldman was so focused on shorting the market it even tried a strategy called a "short squeeze" to drive down the price of obtaining short positions, the report said.
In a statement issued Wednesday, Goldman said that during the subcommittee's hearing last year, its executives "repeatedly and consistently acknowledged that we were intermittently net short during 2007. We did not have a massive net short position because our short positions were largely offset by our long positions, and our financial results clearly demonstrate this point."
But the subcommittee report says such denials by Goldman "are directly contradicted by its own financial records and internal communications."
US Federal Reserve and Morgan Stanley
The Real Housewives of Wall Street
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.
Why Isn't Wall Street in Jail?
Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
This article appears in the April 28, 2011 issue of Rolling Stone. The issue will be available on newsstands and in the online archive April 15.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Wall Street's Big Win
But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
RS Politics Daily: Political news and commentary from Rolling Stone writers and editors
The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called "giving already stinking rich people gobs of money for no fucking reason at all." If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.
In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper East Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him.
The Macks make for an interesting couple. John, a Lebanese-American nicknamed "Mack the Knife" for his legendary passion for firing people, has one of the most recognizable faces on Wall Street, physically resembling a crumpled, half-burned baked potato with a pair of overturned furry horseshoes for eyebrows. Christy is thin, blond and rich — a sort of still-awake Sunny von Bulow with hobbies. Her major philanthropic passion is endowments for alternative medicine, and she has attained the level of master at Reiki, the Japanese practice of "palm healing." The only other notable fact on her public résumé is that her sister was married to Charlie Rose.
It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment.
So how did the government come to address a financial crisis caused by the collapse of a residential-mortgage bubble by giving the wives of a couple of Morgan Stanley bigwigs free money to make essentially risk-free investments in student loans and commercial real estate? The answer is: by degrees. The history of the bailout era reads like one of those awful stories about what happens when a long-dormant criminal compulsion goes unchecked. The Peeping Tom next door stares through a few bathroom windows, doesn't get caught, and decides to break in and steal a pair of panties. Next thing you know, he's upgraded to homemade dungeons, tri-state serial rampages and throwing cheerleaders into a panel truck.
It was the same with the bailouts. They started out small, with the government throwing a few hundred billion in public money to prop up genuinely insolvent firms like Bear Stearns and AIG. Then came TARP and a few other programs that were designed to stave off bank failures and dispose of the toxic mortgage-backed securities that were a root cause of the financial crisis. But before long, the Fed began buying up every distressed investment on Wall Street, even those that were in no danger of widespread defaults: commercial real estate loans, credit- card loans, auto loans, student loans, even loans backed by the Small Business Administration. What started off as a targeted effort to stop the bleeding in a few specific trouble spots became a gigantic feeding frenzy. It was "free money for shit," says Barry Ritholtz, author of Bailout Nation. "It turned into 'Give us your crap that you can't get rid of otherwise.' "
The impetus for this sudden manic expansion of the bailouts was a masterful bluff by Wall Street executives. Once the money started flowing from the Federal Reserve, the executives began moaning to their buddies at the Fed, claiming that they were suddenly afraid of investing in anything — student loans, car notes, you name it — unless their profits were guaranteed by the state. "You ever watch soccer, where the guy rolls six times to get a yellow card?" says William Black, a former federal bank regulator who teaches economics and law at the University of Missouri. "That's what this is. If you have power and connections, they will give you a freebie deal — if you're good at whining."
This is where TALF fits into the bailout picture. Created just after Barack Obama's election in November 2008, the program's ostensible justification was to spur more consumer lending, which had dried up in the midst of the financial crisis. But instead of lending directly to car buyers and credit-card holders and students — that would have been socialism! — the Fed handed out a trillion dollars to banks and hedge funds, almost interest-free. In other words, the government lent taxpayer money to the same assholes who caused the crisis, so that they could then lend that money back out on the market virtually risk-free, at an enormous profit.
Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.
This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."
This whole setup — in which millionaires and billionaires gambled on mountains of dangerous securities, with taxpayers providing the stake and assuming almost all of the risk — is the reason that it's insanely premature for Wall Street to claim that the bailouts have actually made money for the government. We simply can't make that determination until the final bill comes in on all the dicey securities we financed during the bailout feeding frenzy.
In the case of Waterfall TALF Opportunity, here's what we know: The company was founded in June 2009 with $14.87 million of investment capital, money that likely came from Christy Mack and Susan Karches. The two Wall Street wives then used the $220 million they got from the Fed to buy up a bunch of securities, including a large pool of commercial mortgages managed by Credit Suisse, a company John Mack once headed. Those securities were valued at $253.6 million, though the Fed refuses to explain how it arrived at that estimate. And here's the kicker: Of the $220 million the two wives got from the Fed, roughly $150 million had not been paid back as of last fall — meaning that you and I are still on the hook for most of whatever the Wall Street spouses bought on their government-funded shopping spree.
The public has no way of knowing how much Christy Mack and Susan Karches earned on these transactions, because the Fed has repeatedly declined to provide any information about how it priced the individual securities bought as part of programs like TALF. In the Waterfall deal, for instance, we know the Fed pledged some $14 million against a block of securities called "Credit Suisse Commercial Mortgage Trust Series 2007-C2" — but that data is meaningless without knowing how many units were bought. It's like saying the Fed gave Waterfall $14 million to buy cars. Did Waterfall pay $5,000 per car, or $500,000? We have no idea. "There's no way of validating or invalidating the Fed's process in TALF without this pricing information," says Gary Aguirre, a former SEC official who was fired years ago after he tried to interview John Mack in an insider-trading case.
In early April, in an attempt to learn exactly how much Mack and Karches made on the TALF deals, Sen. Chuck Grassley of Iowa wrote a letter to Waterfall asking 21 detailed questions about the transactions. In addition, Sen. Sanders has personally asked Fed chief Bernanke to provide more complete information on the TALF loans given not only to Christy Mack but to gazillionaires like former Miami Dolphins owner H. Wayne Huizenga and hedge-fund shark John Paulson. But Bernanke bluntly refused to provide the information — and the Fed has similarly stonewalled other oversight agencies, including the General Accounting Office and TARP's special inspector general.
Christy Mack and Susan Karches did not respond to requests for comments for this story. But even without more information about the loans they got from the Fed, we know that TALF wasn't the only risk-free money being handed over to Wall Street. During the financial crisis, the Fed routinely made billions of dollars in "emergency" loans to big banks at near-zero interest. Many of the banks then turned around and used the money to buy Treasury bonds at higher interest rates — essentially loaning the money back to the government at an inflated rate. "People talk about how these were loans that were paid back," says a congressional aide who has studied the transactions. "But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?"
Those kinds of deals were the essence of the bailout — and the vast mountains of near-zero government cash turned companies facing bankruptcy into monstrous profit machines. In 2008 and 2009, while Christy Mack was busy getting her little TALF loans for $220 million, her husband's bank hauled in $2 trillion in emergency Fed loans. During the same period, Goldman borrowed nearly $800 billion. Shortly afterward, the two banks reported a combined annual profit of $14.5 billion.
As crazy as it is to lend to banks at near zero percent and borrow back from them at three percent, one could at least argue that the policy may have aided American companies by providing banks more cash to lend. But how do you explain the host of other bailout transactions now being examined by Congress? Like the Fed's massive purchases of securities in foreign automakers, including BMW, Volkswagen, Honda, Mitsubishi and Nissan? Or the nearly $5 billion in cheap credit the Fed extended to Toyota and Mitsubishi? Sure, those companies have factories and dealerships in the U.S. — but does it really make sense to give them free cash at the same time taxpayers were being asked to bail out Chrysler and GM? Seems a little crazy to fund the competition of the very automakers you're trying to rescue.
And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico? How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?
Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That's right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.
Perhaps the most irritating facet of all of these transactions is the fact that hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands. Many of those addresses belong to companies with American affiliations — including prominent Wall Street names like Pimco, Blackstone and . . . Christy Mack. Yes, even Waterfall TALF Opportunity is an offshore company. It's one thing for the federal government to look the other way when Wall Street hotshots evade U.S. taxes by registering their investment companies in the Cayman Islands. But subsidizing tax evasion? Giving it a federal bailout? What the fuck?
As America girds itself for another round of lunatic political infighting over which barely-respirating social program or urgently necessary federal agency must have their budgets permanently sacrificed to the cause of billionaires being able to keep their third boats in the water, it's important to point out just how scarce money isn't in certain corners of the public-spending universe. In the coming months, when you watch Republican congressional stooges play out the desperate comedy of solving America's deficit problems by making fewer photocopies of proposed bills, or by taking an ax to budgetary shrubberies like NPR or the SEC, remember Christy Mack and her fancy new carriage house. There is no belt-tightening on the other side of the tracks. Just a free lunch that never ends.
Rolling Stone
Why is the Federal Reserve forking over $220 million in bailout money to the wives of two Morgan Stanley bigwigs?
America has two national budgets, one official, one unofficial. The official budget is public record and hotly debated: Money comes in as taxes and goes out as jet fighters, DEA agents, wheat subsidies and Medicare, plus pensions and bennies for that great untamed socialist menace called a unionized public-sector workforce that Republicans are always complaining about. According to popular legend, we're broke and in so much debt that 40 years from now our granddaughters will still be hooking on weekends to pay the medical bills of this year's retirees from the IRS, the SEC and the Department of Energy.
Why Isn't Wall Street in Jail?
Most Americans know about that budget. What they don't know is that there is another budget of roughly equal heft, traditionally maintained in complete secrecy. After the financial crash of 2008, it grew to monstrous dimensions, as the government attempted to unfreeze the credit markets by handing out trillions to banks and hedge funds. And thanks to a whole galaxy of obscure, acronym-laden bailout programs, it eventually rivaled the "official" budget in size — a huge roaring river of cash flowing out of the Federal Reserve to destinations neither chosen by the president nor reviewed by Congress, but instead handed out by fiat by unelected Fed officials using a seemingly nonsensical and apparently unknowable methodology.
This article appears in the April 28, 2011 issue of Rolling Stone. The issue will be available on newsstands and in the online archive April 15.
Now, following an act of Congress that has forced the Fed to open its books from the bailout era, this unofficial budget is for the first time becoming at least partially a matter of public record. Staffers in the Senate and the House, whose queries about Fed spending have been rebuffed for nearly a century, are now poring over 21,000 transactions and discovering a host of outrages and lunacies in the "other" budget. It is as though someone sat down and made a list of every individual on earth who actually did not need emergency financial assistance from the United States government, and then handed them the keys to the public treasure. The Fed sent billions in bailout aid to banks in places like Mexico, Bahrain and Bavaria, billions more to a spate of Japanese car companies, more than $2 trillion in loans each to Citigroup and Morgan Stanley, and billions more to a string of lesser millionaires and billionaires with Cayman Islands addresses. "Our jaws are literally dropping as we're reading this," says Warren Gunnels, an aide to Sen. Bernie Sanders of Vermont. "Every one of these transactions is outrageous."
Wall Street's Big Win
But if you want to get a true sense of what the "shadow budget" is all about, all you have to do is look closely at the taxpayer money handed over to a single company that goes by a seemingly innocuous name: Waterfall TALF Opportunity. At first glance, Waterfall's haul doesn't seem all that huge — just nine loans totaling some $220 million, made through a Fed bailout program. That doesn't seem like a whole lot, considering that Goldman Sachs alone received roughly $800 billion in loans from the Fed. But upon closer inspection, Waterfall TALF Opportunity boasts a couple of interesting names among its chief investors: Christy Mack and Susan Karches.
Christy is the wife of John Mack, the chairman of Morgan Stanley. Susan is the widow of Peter Karches, a close friend of the Macks who served as president of Morgan Stanley's investment-banking division. Neither woman appears to have any serious history in business, apart from a few philanthropic experiences. Yet the Federal Reserve handed them both low-interest loans of nearly a quarter of a billion dollars through a complicated bailout program that virtually guaranteed them millions in risk-free income.
RS Politics Daily: Political news and commentary from Rolling Stone writers and editors
The technical name of the program that Mack and Karches took advantage of is TALF, short for Term Asset-Backed Securities Loan Facility. But the federal aid they received actually falls under a broader category of bailout initiatives, designed and perfected by Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner, called "giving already stinking rich people gobs of money for no fucking reason at all." If you want to learn how the shadow budget works, follow along. This is what welfare for the rich looks like.
In August 2009, John Mack, at the time still the CEO of Morgan Stanley, made an interesting life decision. Despite the fact that he was earning the comparatively low salary of just $800,000, and had refused to give himself a bonus in the midst of the financial crisis, Mack decided to buy himself a gorgeous piece of property — a 107-year-old limestone carriage house on the Upper East Side of New York, complete with an indoor 12-car garage, that had just been sold by the prestigious Mellon family for $13.5 million. Either Mack had plenty of cash on hand to close the deal, or he got some help from his wife, Christy, who apparently bought the house with him.
The Macks make for an interesting couple. John, a Lebanese-American nicknamed "Mack the Knife" for his legendary passion for firing people, has one of the most recognizable faces on Wall Street, physically resembling a crumpled, half-burned baked potato with a pair of overturned furry horseshoes for eyebrows. Christy is thin, blond and rich — a sort of still-awake Sunny von Bulow with hobbies. Her major philanthropic passion is endowments for alternative medicine, and she has attained the level of master at Reiki, the Japanese practice of "palm healing." The only other notable fact on her public résumé is that her sister was married to Charlie Rose.
It's hard to imagine a pair of people you would less want to hand a giant welfare check to — yet that's exactly what the Fed did. Just two months before the Macks bought their fancy carriage house in Manhattan, Christy and her pal Susan launched their investment initiative called Waterfall TALF. Neither seems to have any experience whatsoever in finance, beyond Susan's penchant for dabbling in thoroughbred racehorses. But with an upfront investment of $15 million, they quickly received $220 million in cash from the Fed, most of which they used to purchase student loans and commercial mortgages. The loans were set up so that Christy and Susan would keep 100 percent of any gains on the deals, while the Fed and the Treasury (read: the taxpayer) would eat 90 percent of the losses. Given out as part of a bailout program ostensibly designed to help ordinary people by kick-starting consumer lending, the deals were a classic heads-I-win, tails-you-lose investment.
So how did the government come to address a financial crisis caused by the collapse of a residential-mortgage bubble by giving the wives of a couple of Morgan Stanley bigwigs free money to make essentially risk-free investments in student loans and commercial real estate? The answer is: by degrees. The history of the bailout era reads like one of those awful stories about what happens when a long-dormant criminal compulsion goes unchecked. The Peeping Tom next door stares through a few bathroom windows, doesn't get caught, and decides to break in and steal a pair of panties. Next thing you know, he's upgraded to homemade dungeons, tri-state serial rampages and throwing cheerleaders into a panel truck.
It was the same with the bailouts. They started out small, with the government throwing a few hundred billion in public money to prop up genuinely insolvent firms like Bear Stearns and AIG. Then came TARP and a few other programs that were designed to stave off bank failures and dispose of the toxic mortgage-backed securities that were a root cause of the financial crisis. But before long, the Fed began buying up every distressed investment on Wall Street, even those that were in no danger of widespread defaults: commercial real estate loans, credit- card loans, auto loans, student loans, even loans backed by the Small Business Administration. What started off as a targeted effort to stop the bleeding in a few specific trouble spots became a gigantic feeding frenzy. It was "free money for shit," says Barry Ritholtz, author of Bailout Nation. "It turned into 'Give us your crap that you can't get rid of otherwise.' "
The impetus for this sudden manic expansion of the bailouts was a masterful bluff by Wall Street executives. Once the money started flowing from the Federal Reserve, the executives began moaning to their buddies at the Fed, claiming that they were suddenly afraid of investing in anything — student loans, car notes, you name it — unless their profits were guaranteed by the state. "You ever watch soccer, where the guy rolls six times to get a yellow card?" says William Black, a former federal bank regulator who teaches economics and law at the University of Missouri. "That's what this is. If you have power and connections, they will give you a freebie deal — if you're good at whining."
This is where TALF fits into the bailout picture. Created just after Barack Obama's election in November 2008, the program's ostensible justification was to spur more consumer lending, which had dried up in the midst of the financial crisis. But instead of lending directly to car buyers and credit-card holders and students — that would have been socialism! — the Fed handed out a trillion dollars to banks and hedge funds, almost interest-free. In other words, the government lent taxpayer money to the same assholes who caused the crisis, so that they could then lend that money back out on the market virtually risk-free, at an enormous profit.
Cue your Billy Mays voice, because wait, there's more! A key aspect of TALF is that the Fed doles out the money through what are known as non-recourse loans. Essentially, this means that if you don't pay the Fed back, it's no big deal. The mechanism works like this: Hedge Fund Goon borrows, say, $100 million from the Fed to buy crappy loans, which are then transferred to the Fed as collateral. If Hedge Fund Goon decides not to repay that $100 million, the Fed simply keeps its pile of crappy securities and calls everything even.
This is the deal of a lifetime. Think about it: You borrow millions, buy a bunch of crap securities and stash them on the Fed's books. If the securities lose money, you leave them on the Fed's lap and the public eats the loss. But if they make money, you take them back, cash them in and repay the funds you borrowed from the Fed. "Remember that crazy guy in the commercials who ran around covered in dollar bills shouting, 'The government is giving out free money!' " says Black. "As crazy as he was, this is making it real."
This whole setup — in which millionaires and billionaires gambled on mountains of dangerous securities, with taxpayers providing the stake and assuming almost all of the risk — is the reason that it's insanely premature for Wall Street to claim that the bailouts have actually made money for the government. We simply can't make that determination until the final bill comes in on all the dicey securities we financed during the bailout feeding frenzy.
In the case of Waterfall TALF Opportunity, here's what we know: The company was founded in June 2009 with $14.87 million of investment capital, money that likely came from Christy Mack and Susan Karches. The two Wall Street wives then used the $220 million they got from the Fed to buy up a bunch of securities, including a large pool of commercial mortgages managed by Credit Suisse, a company John Mack once headed. Those securities were valued at $253.6 million, though the Fed refuses to explain how it arrived at that estimate. And here's the kicker: Of the $220 million the two wives got from the Fed, roughly $150 million had not been paid back as of last fall — meaning that you and I are still on the hook for most of whatever the Wall Street spouses bought on their government-funded shopping spree.
The public has no way of knowing how much Christy Mack and Susan Karches earned on these transactions, because the Fed has repeatedly declined to provide any information about how it priced the individual securities bought as part of programs like TALF. In the Waterfall deal, for instance, we know the Fed pledged some $14 million against a block of securities called "Credit Suisse Commercial Mortgage Trust Series 2007-C2" — but that data is meaningless without knowing how many units were bought. It's like saying the Fed gave Waterfall $14 million to buy cars. Did Waterfall pay $5,000 per car, or $500,000? We have no idea. "There's no way of validating or invalidating the Fed's process in TALF without this pricing information," says Gary Aguirre, a former SEC official who was fired years ago after he tried to interview John Mack in an insider-trading case.
In early April, in an attempt to learn exactly how much Mack and Karches made on the TALF deals, Sen. Chuck Grassley of Iowa wrote a letter to Waterfall asking 21 detailed questions about the transactions. In addition, Sen. Sanders has personally asked Fed chief Bernanke to provide more complete information on the TALF loans given not only to Christy Mack but to gazillionaires like former Miami Dolphins owner H. Wayne Huizenga and hedge-fund shark John Paulson. But Bernanke bluntly refused to provide the information — and the Fed has similarly stonewalled other oversight agencies, including the General Accounting Office and TARP's special inspector general.
Christy Mack and Susan Karches did not respond to requests for comments for this story. But even without more information about the loans they got from the Fed, we know that TALF wasn't the only risk-free money being handed over to Wall Street. During the financial crisis, the Fed routinely made billions of dollars in "emergency" loans to big banks at near-zero interest. Many of the banks then turned around and used the money to buy Treasury bonds at higher interest rates — essentially loaning the money back to the government at an inflated rate. "People talk about how these were loans that were paid back," says a congressional aide who has studied the transactions. "But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?"
Those kinds of deals were the essence of the bailout — and the vast mountains of near-zero government cash turned companies facing bankruptcy into monstrous profit machines. In 2008 and 2009, while Christy Mack was busy getting her little TALF loans for $220 million, her husband's bank hauled in $2 trillion in emergency Fed loans. During the same period, Goldman borrowed nearly $800 billion. Shortly afterward, the two banks reported a combined annual profit of $14.5 billion.
As crazy as it is to lend to banks at near zero percent and borrow back from them at three percent, one could at least argue that the policy may have aided American companies by providing banks more cash to lend. But how do you explain the host of other bailout transactions now being examined by Congress? Like the Fed's massive purchases of securities in foreign automakers, including BMW, Volkswagen, Honda, Mitsubishi and Nissan? Or the nearly $5 billion in cheap credit the Fed extended to Toyota and Mitsubishi? Sure, those companies have factories and dealerships in the U.S. — but does it really make sense to give them free cash at the same time taxpayers were being asked to bail out Chrysler and GM? Seems a little crazy to fund the competition of the very automakers you're trying to rescue.
And then there are the bailout deals that make no sense at all. Republicans go mad over spending on health care and school for Mexican illegals. So why aren't they flipping out over the $9.6 billion in loans the Fed made to the Central Bank of Mexico? How do we explain the $2.2 billion in loans that went to the Korea Development Bank, the biggest state bank of South Korea, whose sole purpose is to promote development in South Korea? And at a time when America is borrowing from the Middle East at interest rates of three percent, why did the Fed extend $35 billion in loans to the Arab Banking Corporation of Bahrain at interest rates as low as one quarter of one point?
Even more disturbing, the major stakeholder in the Bahrain bank is none other than the Central Bank of Libya, which owns 59 percent of the operation. In fact, the Bahrain bank just received a special exemption from the U.S. Treasury to prevent its assets from being frozen in accord with economic sanctions. That's right: Muammar Qaddafi received more than 70 loans from the Federal Reserve, along with the Real Housewives of Wall Street.
Perhaps the most irritating facet of all of these transactions is the fact that hundreds of millions of Fed dollars were given out to hedge funds and other investors with addresses in the Cayman Islands. Many of those addresses belong to companies with American affiliations — including prominent Wall Street names like Pimco, Blackstone and . . . Christy Mack. Yes, even Waterfall TALF Opportunity is an offshore company. It's one thing for the federal government to look the other way when Wall Street hotshots evade U.S. taxes by registering their investment companies in the Cayman Islands. But subsidizing tax evasion? Giving it a federal bailout? What the fuck?
As America girds itself for another round of lunatic political infighting over which barely-respirating social program or urgently necessary federal agency must have their budgets permanently sacrificed to the cause of billionaires being able to keep their third boats in the water, it's important to point out just how scarce money isn't in certain corners of the public-spending universe. In the coming months, when you watch Republican congressional stooges play out the desperate comedy of solving America's deficit problems by making fewer photocopies of proposed bills, or by taking an ax to budgetary shrubberies like NPR or the SEC, remember Christy Mack and her fancy new carriage house. There is no belt-tightening on the other side of the tracks. Just a free lunch that never ends.
Sunday, April 17, 2011
Japan the Greatest Disaster
For your information - a big read but lots of research
By Gary Vey
Before I wrote that "something" stopped me from writing this story. I suspect it is the same thing that is stopping media giants like CNN, BBC and even al Jazeera from focusing the public's attention on this catastrophe. That "something" is the truth. The current nuclear accident is so huge and deadly that it could easily exceed historic extinction events like the Black Death and Bubonic Plague. Even more frightening is the fact that it seems unstoppable.
Source
By Gary Vey
Before I wrote that "something" stopped me from writing this story. I suspect it is the same thing that is stopping media giants like CNN, BBC and even al Jazeera from focusing the public's attention on this catastrophe. That "something" is the truth. The current nuclear accident is so huge and deadly that it could easily exceed historic extinction events like the Black Death and Bubonic Plague. Even more frightening is the fact that it seems unstoppable.
Saturday, April 16, 2011
Cancer from Fukushima crisis
Anti-nuclear scientist expects ‘about 400,000 people’ will get cancer from Fukushima crisis
By Stephen C. Webster
Christopher Busby, a scientist and anti-nuclear activist, made a startling prediction this week: he claimed “about 400,000 people” within 200 kilometers of Japan’s Fukushima nuclear reactors will develop cancerous growths due to the radioactive fallout.
Challenged by the host as to the data he’s based these claims on, Busby said that he’d been in Berlin compiling research about the Chernobyl disaster and the human toll going out years later. He claims to have based his prediction upon historical data from that last major meltdown.
Japanese officials recently raised the severity level of the Fukushima crisis to 7, the same level of Russia’s Chernobyl disaster.
Busby added that should this awful prediction come true, it will be due to the misinformation spread by government and TEPCO officials in the days following the massive quake and tsunami that devastated Japan last month. He called their actions “criminally irresponsible.”
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By Stephen C. Webster
Christopher Busby, a scientist and anti-nuclear activist, made a startling prediction this week: he claimed “about 400,000 people” within 200 kilometers of Japan’s Fukushima nuclear reactors will develop cancerous growths due to the radioactive fallout.
Challenged by the host as to the data he’s based these claims on, Busby said that he’d been in Berlin compiling research about the Chernobyl disaster and the human toll going out years later. He claims to have based his prediction upon historical data from that last major meltdown.
Japanese officials recently raised the severity level of the Fukushima crisis to 7, the same level of Russia’s Chernobyl disaster.
Busby added that should this awful prediction come true, it will be due to the misinformation spread by government and TEPCO officials in the days following the massive quake and tsunami that devastated Japan last month. He called their actions “criminally irresponsible.”
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