tagged w/ Wall Street
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http://stophomeresalefees.org/sites/default/files/wallstreetmainstreet.jpg
For a while now, we've been covering attempts by some banker-types to get housing developers to add a resale fee(http://bit.ly/cKkiYj) to homes so that if and when you resell your house, you have to pay a percentage of the sale price back to the developer. Of course, the real plans is for the main company behind this plan, Freehold Capital Partners, to securitize and sell off these fees(http://bit.ly/9JbUHl), giving developers a chunk of money upfront. As with any such thing, what this really does is drive down the value of your home and make it more difficult to sell. And, these terms are often slipped in(http://bit.ly/bMwLDf) with little to no notice.
A bunch of states have banned these fees, but now a federal bill has been introduced(http://bit.ly/cPFet6) in the House to ban such things nationwide, as a predatory transfer fee. I'm not sure an overall ban makes sense, but at the very least, these sorts of deals (and their serious implications) should be made clear to home buyers well before they decide to purchase a house.http://stophomeresalefees.org/sites/default/files/wallstreetmainstreet.jpg
For a... more
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From Academy Award® nominated filmmaker, Charles Ferguson ("No End In Sight"), comes Inside Job, the first film to expose the shocking truth behind the economic crisis of 2008. The global financial meltdown, at a cost of over $20 trillion, resulted in millions of people losing their homes and jobs. Through extensive research and interviews with major financial insiders, politicians and journalists, Inside Job traces the rise of a rogue industry and unveils the corrosive relationships which have corrupted politics, regulation and academia.
http://www.insidejob.com/video/inside-job-official-trailer-inFrom Academy Award® nominated filmmaker, Charles Ferguson ("No End In... more
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John Utendahl is among the successful African-Americans on the Wall Street. Born in borough of Queens in NYC John Utendahl earned a degree in Business Administration from Long Island University Brooklyn CampusJohn Utendahl is among the successful African-Americans on the Wall Street. Born in... more
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‘Exhausted’ Supporters Confront Obama in Town Hall
the Blaze.com
September 20, 2010
by Meredith Jessup
“We are still the country that billions of people look to and aspire to, and I want everyone to always remember that,” President Obama told a Washington, D.C., town hall audience this morning. The president’s positive words about the current state of America, however, may have fallen on some deaf ears this morning as a number of former Obama supporters questioned the direction in which he’s steered the country since taking office.
Click to see ...(VIDEO) Pres. Obama Confronted By ‘Exhausted’ Supporters At Town Hall…’Is the American Dream Dead For Me???’...http://ctpatriot1970.wordpress.com/2010/09/21/voter-to-obama-%E2%80%9Ci%E2%80%99m-exhausted-of-defending-you%E2%80%9D-%C2%AB-the-sibyl-speaks/
During a one-hour televised town hall dubbed “Investing in America” on CNBC, Obama fielded a number of questions from concerned Americans, a few of them seemingly rethinking their 2008 support of his candidacy.‘Exhausted’ Supporters Confront Obama in Town Hall
the Blaze.com... more
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As the science behind global warming becomes increasingly discredited and its proponents are exposed as eugenics-obsessed control freaks who care only about destroying freedom, the effort to make Americans pay a global tax has shifted from the justification of climate change to that of poverty.
As we documented on Sunday, leaders from 60 nations will be meeting at the UN this week to push a tax on world financial transactions, formally launching a massive program to bankrupt the middle class and enrich the coffers of global government.
Separately, the leaders of Spain and France are also now calling for new “financing sources” with which to build the infrastructure of a one world government. Remember, this has nothing to do with poverty. As the leaked Danish text revealed, global institutions such as the IMF and the World Bank have no intention of handing the money looted from American taxpayers to poorer countries, they will merely continue to keep the third world in bondage with crippling loans while withholding the real wealth for themselves.
“We need to make more effort to look for alternative financing sources … that aren’t as vulnerable as the budgets of developed countries when faced with crises like the one we’re seeing today,” said Spanish Prime Minister Jose Luis Rodriguez Zapatero.
“Both he and French President Nicolas Sarkozy called for some form of financial tax to raise money to combat poverty, an idea already rejected by the International Monetary Fund and many Group of 20 major developed and developing nations,” reports Reuters.
Although climate change still gets a token mention in the call for a global tax, the justification of poverty has firmly overtaken it as the primary ruse via which globalists plan to conduct a massive transfer of wealth – not to poor nations – but to their own back pockets.
more at link....
Paul Joseph Watson
Infowars.com
September 21, 2010As the science behind global warming becomes increasingly discredited and its... more
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by Zach Carter, Media Consortium blogger
President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.
Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.
The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.
So what exactly will Elizabeth Warren do?
As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.
Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.
Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year—Democrats are likely to lose Senate seats in November.
It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whoever Obama picks—the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.
Getting to work
But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.
Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.
What will the CFPB look like?
Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:
“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”
Sea change
That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.
Alarming poverty rate
In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 percent, with 44 million Americans—roughly one in seven—living in poverty. More than one-third of black and Latino children are growing up impoverished.
So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones—for the past thirty years, more and more American wealth has been concentrated among the richest citizens. The richest 1 percent of U.S. earners are raking in 10 percent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.
Numbers like these aren’t a fluke—they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum– Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.by Zach Carter, Media Consortium blogger
President Barack Obama’s decision to... more
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The Washington Post asks if President Obama is "too cozy with Wall Street or too hard on it? That was the fundamental question he sought to answer Monday in an hour-long town hall meeting sponsored by CNBC, the financial news cable network." Asked by Harwood whether he is "vilifying business," the President replied, "Absolutely not," and "throughout the meeting" he "pushed back against the idea that his record on health-care reform, financial regulation and intervention in the automobile business has hurt the markets and the business community. He said that Wall Street is thriving, pointing out billion-dollar bonuses, and that the auto sector has been revived."
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/20/AR2010092003895.html?hpid=topnewsThe Washington Post asks if President Obama is "too cozy with Wall Street or too... more
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The ink is barely dry on the Dodd-Frank legislation, and already a whistleblower has come forward. Recall that the historic financial reform bill beefed up protections and rewards for people willing to turn in their companies. Many expected a flood of whistleblowers.
Theanonymous whistleblower suit was filed against Plainfield Asset Management, a hedge fund that once had $5 billion in assets under management, alleging the fund inflated assets and then charged management fees based on those false figures. The FBI has initiated an investigation, reports Fortune.
The fund says it has done nothing wrong. In a letter to investors it stated the SEC conducted an exam of Plainfield in June 2009 that lasted nearly three weeks. "We had an exit interview with the SEC in October 2009, and no issue regarding valuation was raised," the fund said.
This may or may not amount to anything. But employees are well-incented to raise these issues, and it will be interesting to see who hears the siren call of a possible huge payout.
Controversy has been dogging the fund. The Manhattan DA is also investigating allegations that the firm "engaged in a so-called loan-to-own scam," reports Fortune. Some of the fund's borrowers say Plainfield loaned them money and then "fabricated" a default event into order to take over their businesses.
http://www.berkeleydailyplanet.com/photos/09-18-08/20080916%20Wall%20Street.jpgThe ink is barely dry on the Dodd-Frank legislation, and already a whistleblower has... more
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by Zach Carter, Media Consortium blogger
Last week, Social Security advocates learned something they had long suspected. Arguments for cutting Social Security aren’t really about economics or the deficit. They’re all about waging war on social services.
In short, some very prominent policymakers are out to dismantle Social Security on ideological grounds. The most recent example of this view comes from Alan Simpson, a former Republican Senator from Wyoming who now serves as co-Chair of President Barack Obama’s Federal Debt Commission. Earlier this summer, Simpson was caught on video spreading absurd lies about Social Security, but his latest outburst explains why he’s been so willing to distort the facts. Simpson simply hates Social Security.
As Joshua Holland highlights for AlterNet, Simpson fired off a nasty email to Ashley Carson, who advocates for elderly women, in which he referred to the most successful social program in U.S. history as “a milk cow with 310 million tits.”
Social Security is doing just fine
But Simpson has a lot of power on the Debt Commission, which is expected to recommend that Congress reduce the deficit by cutting social programs in a report this year. But as Holland notes, Social Security isn’t in trouble:
Social Security is in fine shape. It’s got a surplus that will run out in 2037, but even if nothing were to change by then, it could still continue to pay out 75 percent of scheduled benefits seventy-five years from now, long after the surplus disappears, and those benefits would still be higher than what retirees receive today.
What’s more, as William Greider notes for The Nation, Social Security has never added one cent to the federal budget deficit. According to the law that created the program, Social Security never can. Targeting Social Security in order to fix the deficit is like invading Iraq to fight Al-Qaeda. The issues are not related.
Raising the retirement age robs workers
The Debt Commission is likely to recommend raising the retirement age—the age at which Social Security benefits begin to be paid out. But as Martha C. White notes for The Washington Independent, it’s a “solution” that simply robs low-income workers of their tax money. Everybody pay Social Security taxes when they work, and when they retire, they receive federal support. If you don’t live long enough to actually retire, you don’t get any benefit from Social Security.
“The hardship of raising the retirement age falls disproportionately on low-income workers who work in physically demanding professions, jobs they may not be able to continue through their seventh decade. … Moreover, though the average lifespan has increased since Social Security’s creation, those extra years aren’t enjoyed equally by all Americans. Overall, Americans are living about 7 years longer. But the poorest 20 percent of Americans are living just two years longer.”
Raising the retirement age, in other words, disproportionately hurts the poor—the very people Social Security is supposed to help most.
Subprime scandal 2.0
So who would pick up the slack if Social Security were to be cut? The same crooked Wall Street scoundrels who brought us the financial crisis. If the government cuts back on retirement benefits, the financial establishment can step in and manage a bigger piece of the retirement pie. The more we learn about the financial mess, the less we should want to see our retirement money controlled by bigwig financiers. Truthout carries a blockbuster new investigative report by ProPublica’s Jake Bernstein and Jesse Eisinger that reveals a new, multi-billion-dollar subprime scam engineered by the financial elite.
We’ve known about Wall Street’s subprime shenanigans for some time, but the report reveals that banks were essentially selling their own products to themselves in order to create the illusion that people really wanted lousy mortgages. It’s called “self-dealing,” and it’s supposed to be illegal.
Subprime Disaster, meet Mortgage Nightmare
Here’s how the scam worked: Wall Street crammed thousands of mortgages into securities, then sliced and diced those securities into new products called CDOs. Those CDOs, in turn, were divided into different “buckets” and sold to investors. The riskiest buckets paid out the most money to investors, but were the most likely to take losses if the underlying mortgages ever went bad. As the housing bubble grew more and more out-of-control, investors became wary of these risky buckets, and stopped buying them.
Wall Street banks were still making a killing from the packaging and sale of everything else, though, so they devised a plan to get rid of some risky bits: they’d buy them up themselves, without telling anybody. A bank would create a CDO called, say, Mortgage Nightmare CDO. Then it would create a separate CDO, called, say, Subprime Disaster CDO. Subprime Disaster would buy up a risky bucket from Mortgage Nightmare, creating the illusion to the market that banks were still able to sell off risky mortgage assets without any trouble, even though the bank was basically just selling garbage to itself.
That illusion propped up the prices of these risky assets and created more revenue for the tricky bankers who sold them, and plump, short-term profits for the banks. It also strongly encouraged other bankers to issue lousy mortgages to the public, since those loans could be packaged into lousy CDOs and score short-term profits for Wall Street’s schemers.
Ultimately, this scheming resulted in a multi-billion-dollar disaster for Wall Street, which taxpayers ended up footing the bill for. Anybody want to see that happen with Social Security?
Social programs did not cause the deficit
As Seth Freed Wessler notes for ColorLines, deficit hawks’ emphasis on social programs is at odds with the factors that actually created the deficit. The Bush tax cuts, the wars in Iraq and Afghanistan and the bank bailouts are the big-ticket items when it comes to government revenues and expenses. Yet deficit hawks in Congress have been refusing to extend paltry unemployment benefits or food stamps to the people hit hardest by the recession. And pretty soon they’re going to go after Social Security too.
In reality, the deficit is only a problem if investors are afraid that the government will default on its debt. Markets measure this worry with interest rates—high rates mean investors are worried, low rates mean they are not. Right now, interest rates on government bonds are at their lowest in decades. With the recession dragging on and the recovery weakening, now would be a great time for the government to spend more money to create jobs and help those knocked out of work.
Instead, the policy debate features cranky old men whining about 310-million-titted cows.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.by Zach Carter, Media Consortium blogger
Last week, Social Security advocates... more
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Rohi News, New York: Wall Street may be in for another rocky week, as traders brace for negative data topped by an expected rise in the US unemployment rate that could dampen economic recovery prospects.Rohi News, New York: Wall Street may be in for another rocky week, as traders brace... more
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Gee, I wonder if Obama now regrets going so easy on Wall Street. By seeking that middle ground - the middle ground that is actually hunkered down in the middle of Wall Street - he angered the left who believed he could have done much more. Even with minor changes that rescued the exclusive lifestyle of the pampered bums on Wall Street, he infuriated Wall Street who now are throwing cash hand-over-fist to the Republicans. What a wasted opportunity to promote real change and instead, infuriate everyone along the way. If there's anyone outside of the White House that is impressed with the so-called Wall Street reform, they're in deep hiding.
Obama's Wall Street reform was a slap in the face to the rest of the country yet Wall Street continues to feel they are entitled to royal treatment. The Obama economic team really does deserve to be sent packing. NY Times(http://www.nytimes.com/2010/08/28/us/politics/28singer.html?_r=1&hp):
Generally Democrats have been favored by Wall Street, getting 70 percent of donations from the securities and investment sector just 18 months ago. But by the time Congress took up the financial regulations legislation this June, Republicans were getting 68 percent of the donations, according to an analysis by the Center for Responsive Politics, a nonpartisan research group.
In the 2010 election cycle, financial industry donors, from brokers to real estate interests, have contributed $180 million to both Republican and Democratic Congressional candidates, the analysis showed.
Dave Levinthal, a spokesman for the center, said: “What this says is that Wall Street is awfully angry with Democrats and sees Republicans as a better bet. They’re making an investment in the prospect of a Republican-controlled Congress that they perceive to be more favorable toward their bottom line.”
And in case you missed it, Bernanke's announcement on Friday was HUGE news(http://www.americablog.com/2010/08/bermanke-ready-to-bailout-wall-street.html). The Federal Reserve chief confirmed that if the economy softens up (more) again he plans to bail out Wall Street yet again. No, the lessons learned during the crash didn't make it to the inner corridors of power. How is it possible to even consider another bailout of Wall Street after all of this? They wanted capitalism so let them eat it.Gee, I wonder if Obama now regrets going so easy on Wall Street. By seeking that... more
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Newsweek publishes an excerpt of Capital Offense, by Michael Hirsh, who claims the President has not "acted much like FDR," but has "instead...faithfully channeled" NEC director Larry Summers and Treasury Secretary Geithner's "conservative approach to stimulus and reform. Early on, Obama's two key economic officials had argued down Christina Romer, the new chairwoman of the Council of Economic Advisers, when she suggested a massive $1.2 trillion stimulus to make up for the collapse of private demand." According to Hirsh, Summers and Geithner "didn't want to tamper too much with what they still saw as the economy's engine room: Wall Street."
http://www.newsweek.com/2010/08/29/how-obama-got-rolled-by-wall-street.htmlNewsweek publishes an excerpt of Capital Offense, by Michael Hirsh, who claims the... more
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http://www.alternet.org/images/managed/storyimages_04rmbankerpaylarge.jpg_640x389_150x107
Congress finally passed a moderate reform package to tighten regulations on the banksters of Wall Street. Of course, the banksters howled, protesting even the meekest of reforms -- but the package is now the law, so that's that.
Right? Uh ... no.
What Congress passed is a 2,300-page compendium of concepts, leaving the real decision-making about the details of financial regulation in the hands of the Federal Reserve, the SEC, the Commodity Futures Trading Commission and other regulatory agencies.
In other words, the game is still on for Wall Street lobbyists! So they're presently mounting a furious blitz on the rule-writing regulators, still trying to weaken or even kill many of the reform ideas passed by Congress.
To weasel their way inside, the financial giants have reached into the agencies themselves to hire away nearly 150 regulators, luring them with fat salaries to switch sides and become industry lobbyists.
For the banking powers, these insiders-turned-outsiders are well worth the big bucks, for former regulators have long, personal relationships with those in the agencies who're filling in the blanks left by Congress. If nothing else, these newly minted lobbyists are much more likely to get their phone calls returned by their former colleagues than a stranger would.
A New York Times reporter asked one of the switcheroos who's now working for the dark side if he felt this old-buddy connection gave him a lobbying edge. This regulator-turned-lobbyist bluntly said, "If it didn't, I wouldn't be able to justify getting out of bed in the morning and charging the outrageous fees that we charge our clients, which they willingly pay." He added that "you have to work at an agency to understand the culture and pressure points, and it helps to know the senior staff."
If the Wall Street banksters are able to pull off this regulatory heist, you'll know that it was an inside job.
It's not just the regulators that are going through the revolving door of government service to lobbying. The Center for Responsive Politics reports there's another faction wielding some extra clout: former lawmakers and congressional staffers.
It turns out that old Congress critters never die, they just fade away. Into lobbying firms, that is.http://www.alternet.org/images/managed/storyimages_04rmbankerpaylarge.jpg_640x389_150x1... more
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TheAlexJonesChannel | August 24, 2010
Alex welcomes back to the show Catherine Austin Fitts, president of Solari, Inc., the publisher of The Solari Report, and managing member of Solari Investment Advisory Services. Fitts served as managing director and member of the board of directors of the Wall Street investment bank Dillon, Read & Co. Inc., as Assistant Secretary of Housing and Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration, and was the president of Hamilton Securities Group, Inc.
Catherine Austin Fitts' understanding of the global financial system and the inner workings of the Wall Street-Washington axis are unparalleled. As the former U.S. Assistant Secretary of Housing/Federal Housing Commissioner, Catherine was one of the first to warn of an approaching housing bubble. Her prediction that a 'strong dollar policy' would ultimately lead to a weakened federal credit is currently being proven correct.
http://solari.com/TheAlexJonesChannel | August 24, 2010
Alex welcomes back to the show Catherine Austin... more
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Veteran TV Executive Jim Romanovich reflects on the shortsightedness of Wall Street's failure to consider the 55+ age demographic in its marketing focus.Veteran TV Executive Jim Romanovich reflects on the shortsightedness of Wall... more
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The first Tuesday in November of even numbered years brings us general elections. This is also the mid-term election of a new president’s administration.
The folk are skittish, disgruntled and unemployed. How will they show their collective ire? Will the fact that there is a third party pandering its brand of demagoguery make a difference?The first Tuesday in November of even numbered years brings us general elections. This... more
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Jason Ader, a former hot-shot casino industry analyst turned wealthy hedge fund manager, is rolling the dice, hoping to become a community banker in Las Vegas.
But federal bank regulators haven't seemed very inclined to grant him his wish. And their reluctance underlines an unusual conundrum at the center of the U.S. financial system today.
Hundreds of small banks across the country are struggling to keep their doors open, but the industry's overseers in Washington, D.C. are more wary than ever about the breed of high-rollers that inhabit Wall Street, who come bearing bags of cash and the promise of an easy fix.
The fear is that financiers like Ader are looking to make a killing off of distressed community banks. But he and other new bankers are determined to show regulators that they have them all wrong. To hear Ader tell it, he simply wants to help.
Still, the standoff continues.
Link : http://in.reuters.com/article/businessNews/idINIndia-50272720100721Jason Ader, a former hot-shot casino industry analyst turned wealthy hedge fund... more
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While Goldman Sachs agreed to pay $550 million to resolve a civil fraud lawsuit filed by the SEC, Goldman has not been held accountable for many of its other questionable investment practices. A new article in Harper’s Magazine examines the role Goldman played in the food crisis of 2008 when the ranks of the world’s hungry increased by 250 million. We speak to Harper’s contributing editor Frederick Kaufman.
AMY GOODMAN: We continue with Goldman Sachs.
JUAN GONZALEZ: Well, while Goldman Sachs agreed Thursday to pay $550 million to resolve a civil fraud lawsuit filed by the SEC, Goldman has not been held accountable for many of its other questionable investment practices. A new article in Harper’s Magazine examines the role Goldman played in the food crisis of 2008, when the ranks of the world’s hungry increased by 250 million. The article is titled "The Food Bubble: How Wall Street Starved Millions and Got Away With It."
AMY GOODMAN: The author of the article, Frederick Kaufman, joins us now. He’s a contributing editor at Harper’s Magazine.
Well, explain. We’re talking about Goldman Sachs today, this—they call it a landmark settlement, but they made more after-hours in trading last night than they will have to pay. So let’s look at Goldman Sachs and its record overall.
FREDERICK KAUFMAN: Yeah, this is really—it’s really outrageous. And on a certain level, this reform bill is really a sham, because it does not cover, in any way, shape or form, what Goldman Sachs—and really, let’s be honest here, it wasn’t just Goldman; it was Goldman, and it was Bear, and it was AIG, and it was Lehman, it was Deutsche, it was all across the board, JPMorgan Chase—what these banks were able to do in commodity markets, really which reached its peak from 2005 to 2008, in what is now known as the food bubble. And as Juan points out, this is unconscionable what happened, in the sense that their speculation and their restructuring of these commodity markets pushed 250 million new people into food insecurity and starving, and brought the world total up to over a billion people. This is the most abysmal total in the history of the world.
JUAN GONZALEZ: Now, what were these commodities markets like before the Wall Street firms got involved? And you have a haunting picture, especially of the Minneapolis Exchange, what it was before, what it was like. Could you talk about how things operated and then what Goldman Sachs did precisely?
FREDERICK KAUFMAN: The wheat markets, in particular, in this country are the outcome of a process of development of over 150 years. And that is why, from about 1903 to 2003, the real price of wheat in this country has gone down. And this was one of the great reasons for America’s great twentieth century, the fact that we had cheap food, we had cheap bread. And Goldman, in 1991, came up with a new idea and a new product, which, as I said before, completely restructured this market and completely threw it out of whack.
But before we go there, we just have to maybe review for a second a little bit about how these markets worked and what kept that wheat price stabilized. And Juan, you mentioned the Minneapolis Grain Exchange, this kind of obscure syndicate in the Midwest, which is where the price of this particular kind of wheat, hard red spring wheat, which is the most widely traded wheat in the world, and it’s the most widely exported wheat from the American continent—we kind of set the world price on this wheat. This is where it happens. What’s the history of that price being stabilized is you have, traditionally, in the wheat futures market, two kinds of players: one of the farmers and the millers and the warehousemen—right? And this, of course, includes players like Domino’s Pizza and Sara Lee and General Mills, very large business, capitalist stakes are in this wheat market, right? And they are called bona fide hedgers, because they’re actually buying and selling real wheat. As the price fluctuates in the futures markets, you also traditionally have speculators in this market, people who don’t want wheat, who wouldn’t have any place to put it if they bought it, but they’re making money off buy orders and sell orders, as the price fluctuates each day, and hopefully they’re bringing in some money for themselves every day. That’s the idea.
Now, the key here is that both the bona fide hedgers and the speculators, every time they buy, they’re also selling, and every time they sell, they eventually buy. So their positions are cleared off at the end of the day, OK? Goldman, we have to understand, and a lot of these banks, are not interested in the particular structure of any of these markets. I think it’s a lot of mistake people make when they think about how these bankers are working. We think that they’re actually interested in the markets. We think that they’re—no. What they’re after are very large pools of cash for themselves. They’re after accumulating huge pools of money that they can do with whatever they like on a day-to-day basis. Right? And so, Goldman, in 1991, came up with this idea of the commodity index fund, which really was a way for them to accumulate huge piles of cash for themselves. It wasn’t really about the markets, anyway. The market was just an excuse. And so, the fact that they threw these wheat markets out of whack didn’t really matter to them.
How did this work? Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It’s called "going long." They started going long on wheat futures. OK? And every time one of these contracts came due, they would do something called "rolling it over" into the next contract. So they would take all those buy promises they had made and say, "OK, we still—we’re just going to—we’ll buy more later. And plus we’re going to buy more now." And they kept on buying and buying and buying and buying and accumulating this unprecedented, this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It’s called a "demand shock." Usually prices go up because supply is low, right? That’s the idea. There’s not a lot of supply, so the price goes up. In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then set the price up. Now, a lot of people are saying, "Oh, it was biofuel production. It was drought in Australia. It was floods in Kazakhstan." Let me tell you, hard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel. This is completely beyond the pale, particularly at a—
JUAN GONZALEZ: Almost ten times its historic price.
FREDERICK KAUFMAN: Yeah. It was just completely out of control. And, of course, the irony here is that in 2008, it was the greatest wheat-producing year in world history. The world produced more wheat in 2008 than ever before.While Goldman Sachs agreed to pay $550 million to resolve a civil fraud lawsuit filed... more
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The Obama Deception Full HQ VIDEO…REVIEW…Must Watch For ALL Americans!!!
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The Obama phenomenon is a hoax carefully crafted by the captains of the New World Order. He is being pushed as savior in an attempt to con the American people into accepting global slavery.
We have reached a critical juncture in the New World Order’s plans. It’s not about Left or Right: it’s about a One World Government. The international banks plan to loot the people of the United States and turn them into slaves on a Global Plantation.
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President Obama will sign financial reform into law on Wednesday, thus taking another step toward the change we need, (and most of us voted for in 08). Despite the scare tactics, misinformation and obstructionist agenda of the opposition, this administration is making some good progress.President Obama will sign financial reform into law on Wednesday, thus taking another... more
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