by Bill Sardi

The public may have casually become aware of recent news announcements about an agreed upon goal between bankers to reach an 8-percent cash reserve requirement in their institutions. A list was recently published showing few banks currently have reached this reserve requirement. This list was obviously issued to apply public pressure via the public’s ability to direct their deposits to more stable banks, thus nudging other banks to increase their reserves.

Banks deploy depositors’ money into interest-bearing loans in order to generate profits and keep a portion in reserve to meet depositors’ immediate needs. Recall that withdrawal of $16.7 billion in cash from Washington Mutual bank over a 9-day period is what drove that bank into insolvency even though it had $307 billion of (over-valued) assets and deposits of $188 billion at the time. So cash reserves are of greater importance into today’s unstable financial environment.

It all sounds so collegiate – a bunch of the world’s bankers have agreed to stabilize their institutions so as to better withstand current economic challenges and create greater public confidence in banks. News reports make it sound like bankers are cooperative. But in reality, there is a war going on between bankers, in particular central bankers, those bankers who supply money to depository banks where the public banks their money.

First shots fired

The first shots in this war were apparently fired by banks in Japan a number of years ago. This dispute between bankers is what has led to the current worldwide financial crisis.

Bruce Wiseman makes us aware of this war in his report A Look Behind The Wizard’s Curtain: The Financial Crisis: The Hidden Beginning. Wiseman’s upcoming book and movie on this topic are scheduled for release in 2010.

Wiseman reports that the top ten banks in the world in the 1970s were American banks. But in the 1980s six Japanese banks rose into the top-ten ranking. Wiseman explains this sudden rise, which was said to shift the center of world banking from New York to Tokyo, was due to the low reserves (said to be as low as 3%) kept by bankers in Japan.

With lower reserve requirements, Japanese banks had more available funds to loan than competing banks throughout the globe. These Nippon bankers could establish branch banks throughout the world and dominate the world’s financial markets.

The 8-percent reserve requirement agreed upon in the Basel I agreement, named for the location of its signing at the Bank of International Settlements in Basel, Switzerland, is intended to put the world’s banks on a level playing field when it comes to doing business outside their own countries.

Wiseman says this low-reserve requirement practiced by banks in Japan was perceived as drawing a samurai sword against the rest of the world’s bankers and this didn’t rest well with Alan Greenspan, then chairman of the US Federal Reserve Bank and Board Member of the International Bank of Settlements, a bank for the world’s central bankers headquartered in Basel, Switzerland. Something had to be done about unfair competition in the banking arena.

Bankers in Japan were informed via the Bank of International Settlements, the “central bankers’ bank,” that they would not be allowed to continue their operations in major foreign markets unless they agreed to a minimum reserve requirement – the 8% rule. Japanese bankers were coerced to agree to what has become known as the Basel I accord which was signed in 1988.

Foot dragging over reforms

But it’s now 21 years later, and bankers are still dragging their feet to comply with a stability measure that, had it been implemented, may have staved off part of the current economic crisis long before it occurred.

Don’t get a false impression that Japanese banks are solely to blame for bank instability. Five investment banks in the U.S. (Goldman Sachs, Lehman Brothers, Bear Stearns, Merrill-Lynch and Morgan Stanley) appealed to the Securities Exchange Commission (SEC) and won the privilege to carry a 20-to-1 or even 30-to-1 ratio of capital to loans (not the same as cash reserves, as mentioned above).

For example, instead of these investment banks employing a more traditional capital-to-loan ratio of 10-to-1 (let’s say $1 billion of capital to issue $10 billion in loans), they were given the green light to loan at the ratio of 20-to-1 or even 30-to-1 ($1 billion of capital to issue $20 billion or even $30 billion in loans). This was a conscious decision by the SEC that probably was coerced by political influence.

Basel II spawns real estate bubble

This bankers’ war continued over the following decade and a half, culminating in Basel II in 2004, another agreement between banks to standardize reporting requirements for credit worthiness and capital that each depository bank holds. This is when the so-called “mark-to-market” rules were established. The Bank of International Settlements is attempting to get banks to value their real estate assets on real market value and to reveal all of the non-performing loans (foreclosures) they have on their books. Such revelations and transparency would doom many banks, including some of the world’s largest banks.

Basel II also made provision for reduced reserve requirements for mortgage-backed home loans. This made home loans more profitable and is set off the explosive false growth in residential real estate and created the financial bubble that finally popped in 2008. Central bankers are to blame for setting off this wild fire in the real estate market.

How many banks intend to comply?

A recent survey conducted by the Financial Stability Institute attempted to determine how many banks in 115 jurisdictions in less developed nations in Africa, Asia, Latin America and the Middle East intend to comply with Basel II. The survey was not sent to banks in Japan, possibly for good reason. The 2004 survey revealed 95 countries currently plan to comply with Basel II reporting requirements, and even more countries said they intended to comply with Basel II in a 2006 survey.

However, according to a report in Risk Magazine, the banking industry is fighting finalized reforms in the Basel II mandates, claiming the amount of capital required cannot be raised within the allotted time framework. Finance ministers and central bank governors of the 20 leading economies (called the Group of 20) wants full implementation by 2012.

Prudent banking

Prudent banking is not beyond the capability of bankers. For example, according to a Wall Street Journal article, while Basel II requires a capital to loan ratio of 9%, banks in India are required to have a 12% standard.

Bankers in China have been even more prudent. Chinese banks adhere to a cap on loan-to-deposit ratios of about 75% (the actual ratio is more like 67%), and leverage ratios (capital-to-loan ratios) in the single digits – considerably below what the big U.S. banks have been allowed to accumulate. Furthermore, in China, home buyers can only borrow up to 70% of the value of their property (60% if it’s a second purchase).

Fang Xinghai, director-general of Shanghai’s financial-services office, recently described the difference between the Chinese and U.S. approaches to bank regulation in the Wall Street Journal: “In the U.S., the regulators don’t believe in regulation to begin with,” he said, and pointed a finger at former Federal Reserve Chairman Alan Greenspan’s belief that the Fed’s job wasn’t to prevent or deflate assets bubbles, but to “deal with the consequences.”

The Wall Street Journal report goes on to say that bankers in Spain certainly incurred exposure to an overbuilt real estate market (an estimated 1.2 million unsold new homes), but they avoided further trouble by consolidating all their assets, even non-performing home loans, onto their balance sheets. For comparison, “Special investment vehicles,” employed by American banks, “cooked the books” and keep risky debt off of bank ledgers.

Resorting to the unthinkable

Unable to create a level competitive field for banking, the bank reform effort has now shifted away from cooperation to a master plan to take down the world’s economies and exercise complete control in the aftermath by introduction of a master plan to control banking and currency.

According to Wiseman, the plan underway now is to intentionally “take down the United States and the U.S. dollar as the stable datum of planetary finance and replace it with something called a Global Monetary Authority” that will issue a single global currency via the world’s central bankers, who in turn distribute money to depository and investment banks.

What Wiseman is talking about here is that a small group of less than a dozen central bankers are likely to rule the world via control of currency.

As confirmation of Wiseman’s claim, the call for a “global monetary authority” was echoed by a Yale professor in theFinancial Times in 2008.

What looms is a single global currency, probably issued by the International Monetary Fund (IMF), which will then exert control over the world’s banks. A more complete picture of what is likely being planned is provided here andhere.

The intentional take-down of the world’s economies and establishment of a world currency will be spawned out of planned chaos which would provoke the planet’s masses to beg for relief. The new currency and its new central bank will be offered up as the quickest solution to the world’s economic turmoil.

But will world control be lost?

However, the bankers and elites risk losing control of the world that they now hold. As investigative journalist Daniel Estulin reports, “One of Bilderberg’s primary concerns accordingly is the danger that their zeal to reshape the world by engineering chaos in order to implement their long term agenda could cause the situation to spiral out of control and eventually lead to a scenario where Bilderberg and the global elite in general are overwhelmed by events and end up losing their control over the planet.” (The Bilderberg Group, comprised of over 100 influential people, meets annually to discuss issues of world concern.)

Yet central bankers and elitists plod ahead, all the while attempting to tighten their grip on the masses. Following the G20 (20 leading countries of the world) meeting at the beginning of April, 2009, it was reported that, “The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” A communiqué released by the G20 leaders stated that, “We have agreed to support a general standard drawing rights (SDR) allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,” and that, “SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that has lain dormant for half a century.” Essentially, “they are putting a de facto world currency into play. It is outside the control of any sovereign body.”

IMF plants an agent in our midst

The IMF has the right man in place to do the job in the U.S. Timothy Geithner, U.S. Treasury Secretary, was director of the Policy Development and Review Department (2001–2003) at the IMF. Geithner is also well connected in other circles. He was also part of a consulting firm in the 1980s owned by former Secretary of State Henry Kissinger. Furthermore, Geithner was also president of the Federal Reserve Bank of New York and a staffer at the Council on Foreign Relations.

Geithner, as U.S. Secretary of the Treasury, apparently sees no conflict between his duty to uphold the U.S. Constitution and a one-world currency. He goes along with the agenda to abolish the US dollar in favor of a global medium of exchange. Geithner was quoted to say: “Our hope is that we can work with Europe on a global framework, a global infrastructure which has appropriate global oversight.”

What lies ahead

Foot dragging by the world’s bankers to comply with banking standards and the intentional collapse of world economies to force bank reform has dragged the world into a quagmire that could lead to mass starvation, suicide and even war. A former top British bank regulator recently called for the formation of an international bank police agency to bring the bankers into line. But such an idea appears to be too late. Efforts to usher in an IMF-issued currency appear to be steaming forward.

Such plans, to usher in a one-world government and a single currency, were made decades ago by elitists and central bankers, but they were waiting for world events to be engineered in a manner to create the perfect storm that would cause Americans to give up their sovereignty, and their greenbacks, in exchange for a new type of play money and subservience to another rule of law outside the U.S. Constitution. Professor Carroll Quigley described this covert plan in the 1960s in his book entitled Tragedy and Hope: A History Of The World In Our Time. Another broad description of this plan is found here.

World control

Few Americans catch on to the fact that central bankers, not elected representatives, have controlled America for some time now. It was the British banker Mayer Amschel Bauer Rothschild who said in 1791: “Allow me to issue and control a nation’s currency, and I care not who makes its laws.”

The world exists for the central bankers to plunder, and no one else. What is good for the central bankers is good enough for the rest of the world. It’s like the world is a tiger that is being slung around by its tail. If central bankers aren’t paid their dues, the world must suffer. Yet the bankers must not be deprived of their seven, eight and even nine-figure commission checks amidst the turmoil. The world is being slung into economic chaos over a long-standing war between central bankers. If the masses only knew.

by David Calderwood

Recent LRC Blog posts surrounding the classical liberal roots of Marxist class analysis reminded me that we have rarely had a clearer portrait of the two dominant heads of the exploiting class hydra. In the past two years, even with central bank stonewalling and opaque government deals it is obvious that the main exploiters are those individuals managing the political system and those individuals who own the financial system’s central conduits.

When the Treasury Department’s managers and the Federal Reserve System’s managers collude behind closed doors, and the lowliest scam that emerges is a lottery-winner level of financial fraud…one that the SEC miraculously can’t fathom…it is pretty obvious who is getting rich at our expense.

Before everyone gets all “conspiracy theory” on me, let’s recognize the obvious, which is that people with similar aims and who benefit from the same set of conditions need not have each other on speed dial in order to coordinate their actions.

Just as the market spontaneously organizes the efforts of individuals laboring in a voluntary system to generate vast productivity, the political system coordinates the efforts of the exploiting class to inexorably change the rules so their exploitive efforts produce more loot. The clown in the White House need not hold a conference call with the heads of the major banking families and the clowns running Congress in order to get all their plans set.

This raises an interesting conjecture.

Has the centuries-long spontaneously-organized labor of the major banking cartel families been the dominant force that gifted us with this hydra political economy that is stealing us blind?

Here’s my line of thought:

We know from Professor Hoppe and other Mises Institute contributors that monarchies tended to be less war-loving than the modern state. Wars generate stunning levels of financing demand, so from this we can infer that the owners of banking cartels would see a transition from monarchy to modern klepto-democratic states as a means of growing themarket for their services.

Shifting education to the public sector where Fabian socialism could be taught as a state religion was also highly constructive to financiers’ profits. Once individual citizens are trained to think about the abstraction we call “government” as something magically distinct from the people who manage it, the state is seen as an extension of society rather than a vehicle for exploitation of producers by parasites.

Unprecedented capital then flows from producers into the hands of the political system’s managers and their financiers (especially once production is so crippled that people begin borrowing to artificially maintain their standard of living).

This process required no more explicit coordination than has the advancement of the computer industry since the invention of the printed circuit. All that was necessary was a relative few people who gravitated to loci of power due to their willingness to exploit others, combined with a great increase in wealth allowing productive individuals to support a vast increase in the burden of individuals exploiting them.

Regardless of the specific desires of individuals in the exploiting class, their paths were largely parallel. Exploiter-class occupations proliferated, with celebrity posts in “news” media, entertainment, and the state apparatus itself. During the latter stage of this two-century development, even some of the banking cartel managers came out of the shadows to gain notoriety and celebrity, to be treated like they have a direct line to Divinity.

State and financial institutions spread like rot in a landfill, attracting exploitation-minded people like roadkill attracts flies.

Across the spectrum of human endeavor, once exploiting-class individuals got a toehold in something, in little time their cancer spread and choked most of the voluntary life from previously healthy market-based activities. The involvement of the state’s coercion in education turned to dominance and with the seeming removal of market discipline from schooling it became a free-for-all for the exploiters.

Is it shocking that grade school kids can identify mass murderers like Lincoln or Sherman but have never heard names like Bastiat, de La Boétie, or Say? Is it a surprise that college coeds wear Che Guevara t-shirts but would respond, if you told them about the man who explained in 1922 unequivocally why the USSR would fail, “Ludwig von-what?”

It’s no wonder that exploitation of the productive became the dominant process at universities. The majority of people teaching in many departments “sell” things that have no market value. Of course they attack the pillars of peace,property ownership, and non-coercion that might impede their desire for more power, prestige, or whatever else their exploitation might yield. The tick, the flea, and the mite have different aims and occasionally compete for host resources, but all wish to stop the horse’s tail from swatting at them.

So here we stand at the edge of the abyss, observing what this perverse anti-market’s coordination has wrought. Over a century of systematic crippling of individual liberty and the free market it generates have strip-mined whole societies of capital. In this final act productive people even mortgaged everything they own to the financiers and are being driven from their homes as politicians sell their tax liabilities to…political entrepreneurs.

What should we expect now?

First we should see the exploiters blame their nemesis, liberty, for the very ills they and their forbearers bequeathed us through war, inflation, regulation, and above all, debt.

Second, it seems that the true exploiter-class captains are ideology-free. They’re not Marxists. They believe in only one form of private property: theirs.

We should expect the great financiers and banking cartels to divest themselves of their highly profitable financial cons that are now ready to collapse. Trillions of dollars worth of debt and paper assets will flow from the banksters into the “hands” of the public through Treasury Department guarantees, bailout schemes, pension and 401(K) plan purchases, and the like just in time to see it all collapse in value.

Then, once the collapse is complete and all defaults have occurred, those same captains of finance (perhaps helming firms sporting new façades) will swoop in and buy it all back up at fire-sale prices when there’s blood running in the streets. For instance, look for all those mortgages in default to be bundled up and sold for a fraction of a penny, so the banking cartels will succeed in owning vast swaths of real estate, ready to sell it back to the dispossessed at a healthy markup.

They, their grandparents, and their great-great-grandparents have done it before. How do you think they accumulated most of the world’s wealth, by inventing useful things? The only entrepreneurship they know is the political kind.

This murderous form of exploitation will end or at least shrink considerably someday. This won’t occur, however, until there’s a widespread appreciation of the malignant alliance between finance and the state, and a new period ofprosperity is begun by eliminating the exploiting class’ revolving door (starting here) between them.

from Reuters

The Irish government has appointed investment bank Rothschild to advise on the restructuring of the country’s banking sector, a source close to the firm said on Tuesday.

“We will advise the Department of Finance on how to shape the banking system going forward, including the establishment of the National Asset Management Agency and any possible consolidation in the sector,” the source said.

Bank of America Merrill Lynch (BAC.N) was hired to advise the government in September, although that contract expired in the summer and was put out to tender in July, a spokesman for the Department of Finance said.

The spokesman confirmed Rothschild’s new role.

Rothschild will also advise on dealings with the European Commission and recommend how relationships with lenders participating in the “bad bank” scheme should be managed, according to a tender document posted on Ireland’s public procurement website.

Dublin plans to take over risky property loans with a book value of up to 90 billion euros ($129.2 billion) from Allied Irish Banks (ALBK.I), Bank of Ireland (BKIR.I) and other lenders and park them in a National Asset Management Agency, or bad bank, to free up the flow of credit.

Government bonds issued in return for the assets will boost Ireland’s national debt by 60 billion euros, according to the median forecast of 6 economists in a Reuters poll on Tuesday, compared with a national debt level of 67 billion euros at the end of July.

from EconomicPopulist.org

“We must break the Money Trust or the Money Trust will break us.”
- Louis D. Brandeis, 1913

When the economy appeared to be melting down last September, Wall Street bank representatives began showing up in Congress like mobsters walking into a mom-and-pop business looking for protection money.
“Nice economy ya got here.(crash!) It would be a shame if something were to happen to it.”

Mobsters and Robber Barons have a lot in common.
Neither has any respect for the law or morals, only for power. Neither can ever be satisfied with any amount of wealth. They will always need to steal more and more and more until they’ve completely bankrupted their victims.

We are now at the mercy of modern Robber Barons, and if history is any judge, it is either them or us.

Bank Wars

“The great monopoly in this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question.”
- Woodrow Wilson, 1911

On February 28, 1913, the House of Representatives released a report with the most banal name imaginable – Committee Appointed Pursuant to House Resolutions 429 and 504 to Investigate the Concentration of Control of Money and Credit.
In spite of the long-winded and innocuous title, the testimony in the report revealed to the world an unseemly and corrupt conspiracy of Wall Street bankers that threatened the very foundations of our democracy. Despite the dangers, many of the recommendations of the Pujo Committee were ignored until after the 1929 Crash.

Arsene Pujo

As a species and a nation, we seem to be doomed to repeat our mistakes.

Dirty political battles between Washington and eastern bankers are not a new concept in America. The Bank War between President Jackson and the Second Bank of the United States is the most obvious and public of these exchanges. Nicolas Biddle, the Second Bank’s President, purposely caused the 1834 Depression, by restricting the money supply, to use as leverage against President Jackson.

^{Src: The Smoking Argus Daily, Allison Bricker}

Unfortunately for Mr. Biddle, his arrogance regarding his ability to cause an economic collapse allowed his ego to get the best of him. He continued boasting, now publicly that relief would only come if Congress renewed the bank’s charter. When Pennsylvania Governor George Wolf, a previous supporter of the central bank was made aware of the bank President’s sentiments, he immediately came out against extension or renewal of the bank’s charter.

When someone mentions trusts and trust-busting, people tend to think of John. D. Rockefeller’s Standard Oil, J. P. Morgan’s Northern Securities railroad company, and Andrew Carnegie’s U.S. Steel.
What frequently gets forgotten is the Money Trust of Wall Street. The reason that it isn’t mentioned is because it was never totally broken. Instead the decision was to regulate it via the creation of the Federal Reserve. Nicolas Biddle’s dream was finally realized.

^{Src: The Smoking Argus Daily, Allison Bricker}

Our Financial Oligarchy

“Far more dangerous than all that has happened to us in the past in the way of elimination of competition in industry is the control of credit through the domination of these groups over our banks and industries.”
- Pujo Committee

“The dominant element in our financial oligarchy is the investment banker. Associated banks, trust companies and life insurance companies are his tools…Though properly but middlemen, these bankers bestride as masters America’s business world, so that practically no large enterprise can be undertaken successfully without their participation or approval.”
- Louis D. Brandeis, 1913

What frequently gets lost in economic discussions is that the current depression is different from all other post-WWII recessions. All previous recessions were caused intentionally by the Federal Reserve.
The Fed would raise interest rates in order to choke off inflation. Once the inflation was contained they would lower interest rate. Consumer demand, which was artificially suppressed by the Fed’s high interest rates, would then be released and the economy would boom.

That didn’t happen this time.

The Fed didn’t raise interest rates to choke off inflation. There was no consumer demand that was artificially suppressed, thus there was no pent-up demand that was waiting to be released when the Fed cut rates.
What little “less bad” news that we’ve heard with home and auto sales has been almost exclusively to do with the tax rebates for first-time home buyers and the cash-for-clunkers program. Both of these programs are limited in time and scope, and both bring future demand to the present, which will leave an even bigger gap in demand once they are finished.

What happened this time was an economic collapse that emanated directly from Wall Street. It’s source was bad loans that the bankers and rating agencies pushed onto the financial markets of the world, knowing full well that it was only a matter of time before they blew up and took down the world economy.
The economy didn’t collapse because of government regulations. It didn’t collapse because the government taxed too much or spent too little.
It wasn’t because the American consumer stopped spending.

It was because the financial system knowingly overpriced a major financial asset class, and then leveraged itself against that asset class in the vain hope that the Day of Reckoning never came.

The whole financial crisis only came to light because of what amounts to a falling out amongst thieves.

War Between the Ruling Kleptocracy

“Gentlemen: You have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you.
Yours truly, Cornelius Vanderbilt.”
- 1853

It is sometimes forgotten that the 19th Century Robber Barons spent much of their time wasting resources trying to crush each other.
For example, the Erie War crippled what should have been the most profitable railroad in the nation, not to mention the cost from the corruption of the entire New York Assembly. An even more colorful battle involved the Albany and Susquehanna Railroadthat resulted in hundreds of paid goons crashing trains into each other and engaging in shooting wars.

History has proven that the unrestrained greed of an unregulated economy is neither fair, nor efficient. It also often leads to economic crisis.

Wall Street knows that you can make enormous amounts of money during an economic crisis, and no crisis is more fortunate than the failure of a leading competitor. The perfect example of that is the Panic of 1907.

John Pierpont Morgan again used rumor and innuendo to create a panic that would change the course of history. The panic of 1907 was triggered by rumors that two major banks were about to become insolvent. Later evidence pointed to the House of Morgan as the source of the rumors.

J. P. Morgan

J. P. Morgan’s false rumors created a real panic and it threatened to bring down the entire financial center. Morgan then nobly contacted his European sources and managed to borrow $100 million worth gold bullion in order to stem the panic. History remembers Morgan as saving the day, and also helping to convince the public that we needed a central bank in this country.
Morgan didn’t save the system from a crisis of his own creation out of the goodness of his heart.

Of course Morgan did not go unrewarded. Recall from our story of two weeks ago that Teddy Roosevelt, despite his antitrust proclivities, allowed Morgan to purchase the Tennessee Coal and Iron Company for about $45 million when the true value was closer to $700 million, thus expanding Morgan’s steel empire.

If this sounds somewhat familiar, it should. Recall the failure of Bear Stearns.

Bear Stearns had been unpopular with the rest of the Wall Street oligarchy since it refused to participate in the bailout of Long-Term Capital Management in 1998, despite helping to create the problem.
The most suspicious fact of the Bear Stearns failure was the massive increase in short positions on March 10 and 11, with only five days left before expiration. Some insiders knew something they shouldn’t have. John Olagues makes a strong case that it was insiders at JP Morgan Chase that were shorting Bear Stearns and helping to create a “run” on their stock, knowing full well that they would be taking over the bank with the Fed’s help.

How would people at JP Morgan Chase know that ahead of time? They were in position to make the deal.

The Fed and U.S. Treasury brokered a deal for J.P. Morgan in haste without question. Usually, such huge deals or mergers would go through committees or FTC oversight, but none of that here –a quick weekend jaunt in the park. It was not surprising that no red flags were raised about J.P. Morgan’s chairman, James Dimon holding a board seat at the Federal Reserve Bank of New York when the deal was made.

Bear Stearns was bought by JP Morgan Chase at a price of $2 a share. A week later it was raised to $10 a share. Was it shame or a guilty conscience to caused JP Morgan Chase to give back a small amount of their quick profits?
JP Morgan Chase was in a position to profit from Bear Stearns demise, and another profit from its taxpayer-funded acquisition, just like in 1907.

Later on that year, JP Morgan Chase managed to purchase Washington Mutual, a bank with $307 Billion in assets, for the price of $1.888 Billion after the FDIC seized the bank.
Back in April JP Morgan Chase offered to purchase WaMu at a far, higher price, but WaMu refused.

“You should have sold to JPMorgan Chase in the spring, and you should do so now. Things could get a lot more difficult for you.”
- Treasury Secretary Paulson to WaMu CEO Kerry Killinger, August 2008

A Naked Coup

“We’re moving to an oligopolistic situation.”
- Kenneth Guenther, Independent Community Bankers of America, 1999

“The goose that lays golden eggs has been considered a most valuable possession. But even more profitable is the privilege of taking the golden eggs laid by somebody else’s goose. The investment bankers and their associates now enjoy that privilege. They control the people through the people’s own money.”
- Louis D. Brandeis, 1913

It’s too big of a coincidence that the biggest winners on Wall Street are also the most politically connected, and no one is more connected than Goldman Sachs.

Bush’s Treasury secretary, Hank Paulson, is a former Goldman C.E.O., and his replacement at Treasury, Tim Geithner, was mentored by Goldman alumni. Mario Draghi, who is leading the crisis response for the E.U., is a former Goldman vice chairman.

Merrill Lynch C.E.O. John Thain was once Goldman’s co-president, and Wachovia chief Robert Steel was a vice chairman. Ed Liddy, the new C.E.O. of A.I.G., was Goldman’s vice chairman. World Bank president Robert Zoellick was a managing director. Even Neel Kashkari, the 35-year-old tapped to oversee the $700 billion Troubled Assets Relief Program, served at Goldman as a vice president.

And the list goes on. Robert Rubin, President Clinton’s former Treasury Secretary, was once the co-chairman of Goldman Sachs. Jon Corzine, now the governor of New Jersey, is a former Goldman Sachs CEO. A top aide of Tim Geithner is former Goldman lobbyist Mark Patterson.
It’s so obvious, so in-your-face, that one must assume that Goldman Sachs feels itself invulnerable.

By now everyone should be aware that Goldman Sachs was the biggest beneficiary of the AIG bailout, to the tune of $12.6 Billion, and will be the winners again if AIG finally goes under.
With Paulson in charge of the Treasury at the time, it appeared that Goldman Sachs was bailing out Goldman Sachs. Rich bankers were bailing out rich bankers, and working-class taxpayers were footing the bill.

America has been purchased in a leveraged buyout. For about $5.2 Billion Wall Street has purchased the complete deregulation of the the financial sector, and unprecedented political influence that even now allows them to defeat any new regulations they choose. It’s actually a very good return on investment.

“America’s economic system is where it is today because gambling became the financial sector’s principal preoccupation. The pile of chips grew so big that the Money Industry displaced real businesses that provided real goods, services and jobs.”
- Harvey Rosenfield

This corrupt collusion between financiers and government officials was spelled out in no uncertain terms in Simon Johnson’s article, The Quiet Coup. Simply put, America is following the path of petty Banana Republics.

elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive. The government seems helpless, or unwilling, to act against them.

Johnson goes on to say that chaos and confusion are very much in the interests of the ruling oligarchy, as it lets them take things, both legally and illegally, with impunity.
This message is echoed by Matt Taibbi in his article The Big Takeover.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

It seems hard for you and I to believe that anyone, any group, would purposely engineer an economic crisis for personal benefit. That’s because you and I aren’t consumed with ego, greed, and lust for power like the bankers on Wall Street are today. History has shown, time and time again, that this is exactly what these people do. Why should now be any different?
Goldman Sachs and JP Morgan Chase have already benefited from the crisis.

The spirits of Nicolas Biddle and John Pierpont Morgan are alive and well today in the plush offices of Wall Street.