Sep 282014
 September 28, 2014  Posted by at 7:55 pm Finance Tagged with: , , , , ,

Marjory Collins Traffic jam on road from the Bethlehem Fairfield shipyard to Baltimore April 1943

It is, let’s say, exceedingly peculiar to begin with that a government – in this case the American one, but that’s just one example -, in name of its people tasks a private institution with regulating not just any sector of its economy, but the richest and most politically powerful sector in the nation. Which also happens to be at least one of the major forces behind its latest, and ongoing, economical crisis.

That there is a very transparent, plain for everyone to see, over-sized revolving door between the regulator and the corporations in the sector only makes the government’s choice for the Fed as regulator even more peculiar. Or, as it turns out, more logical. But it is still preposterous: regulating the financial sector is a mere illusion kept alive through lip service. Put differently: the American government doesn’t regulate the banks. They effectively regulate themselves. Which inevitably means there is no regulation.

The newly found attention for ProPublica writer Jake Bernstein’s series of articles, which date back almost one whole year, about the experiences of former Fed regulator Carmen Segarra, and the audio files she collected while trying to do her job, leaves no question about this.

What’s going on is abundantly clear, because it is so simple. The intention of the New York Fed as an organization is not to properly regulate, but only to generate an appearance – or illusion – of proper regulation. That is to say, Goldman will accept regulation only up to the point where it would cut into either the company’s profits or its political wherewithal.

What the ‘Segarra Files’ point out is that the New York Fed plays the game exactly the way Goldman wants it played. Ergo: there is no actual regulation taking place, and Goldman will comply only with those requests from the New York Fed that it feels like complying with.

In the articles, the term ‘regulatory capture’ pops up, which means – individual – regulators are ‘co-opted’ by the banks they – are supposed to – regulate. But the capture runs much larger and wider. It’s not about individuals, it’s a watertight and foolproof system wide capture.

The government picks a – private – regulator which has close ties to the banks. The government knows this. It also knows this means that its chosen regulator will always defer to the banks. And when individual regulators refuse to comply with the system, they are thrown out.

In one of the cases Segarra was involved in during her stint at the Fed, the Kinder Morgan-El Paso takeover deal, Goldman advises one party, has substantial stock holdings in the other, and appoints a lead counsel who personally has $340,000 in stock involved. Conflict of interest? Goldman says no, and the Fed complies (defers).

The lawsuit Segarra filed against the NY Fed and three of its executives was thrown out on technicalities by a judge whose husband was legal counsel for Goldman in the exact same case. No conflict of interest, the judge herself decides.

This is not regulation, it’s a sick and perverted joke played on the American people, which it has been paying for it through the nose for years, and will for many years to come. Sure, Elizabeth Warren picks it up now and wants hearings on the topic in Congress, but she’s a year late (it’s been known since at least December 2013 that Segarra has audio recordings) and moreover, it was Congress itself that made the NY Fed the regulator of Wall Street. Warren has as much chance of getting anywhere as Segarra did (or does, she’s appealing the case).

The story: In October 2011, Carmen Segarra was hired by New York Fed to be embedded at Goldman as a risk specialist, and in particular to investigate to what degree the company complied with a 2008 Fed Supervision and Regulation Letter, known as SR 08-08, which focuses on the requirement for firms like Goldman, engaged in many different activities, to have company-wide programs to manage business risks, in particular conflict-of-interest. Some people at Goldman admitted it did not have such a company-wide policy as of November 2011. Others, though, said it did.

Let’s take it from there with quotes from the 5 articles Bernstein wrote on the topic over the past year. To listen to the Segarra files, please go to The Secret Recordings of Carmen Segarra at This American Life.

One last thing: Jake Bernstein’s work is of high quality, but I can’t really figure why he syas things such as teh audio files show: “a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority”. Through his work, and the files, it should be clear that just ain’t so. Both the Fed’s policy and authority are crystal clear and ironclad.

October 10 2013:

NY Fed Fired Examiner Who Took on Goldman

In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem. Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements. That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.

Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment. Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired. “They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.” Today, Segarra filed a wrongful termination lawsuit against the New York Fed in federal court in Manhattan seeking reinstatement and damages.

[..] Goldman is known for having close ties with the New York Fed, its primary regulator. The current president of the New York Fed, William Dudley, is a former Goldman partner. One of his New York Fed predecessors, E. Gerald Corrigan, is currently a top executive at Goldman. At the time of Segarra’s firing, Stephen Friedman, a former chairman of the New York Fed, was head of the risk committee for Goldman’s board of directors.

[..] Segarra’s termination has not been made public before now. She was specifically assigned to assess Goldman’s conflict-of-interest policies and took a close look at several deals, including a 2012 merger between two energy companies: El Paso Corp. and Kinder Morgan. Goldman had a $4 billion stake in Kinder Morgan while also advising El Paso on the $23 billion deal. Segarra said she discovered previously unreported deficiencies in Goldman’s efforts to deal with its conflicts, which were also criticized by the judge presiding over a shareholder lawsuit concerning the merger. Her lawsuit also alleges that she uncovered evidence that Goldman falsely claimed that the New York Fed had signed off on a transaction with Santander, the Spanish bank, when it had not. A supervisor ordered her not to discuss the Santander matter, the lawsuit says, allegedly telling Segarra it was “for your protection.”

[..] As part of her examination, Segarra began making document requests. The goal was to determine what policies Goldman had in place and to see how they functioned in Kinder Morgan’s acquisition of El Paso. The merger was in the news after some El Paso shareholders filed a lawsuit claiming they weren’t getting a fair deal.

[..] By mid-March 2012, Goldman had given Segarra and a fellow examiner from the New York State Banking Department documents and written answers to their detailed questions. Some of the material concerned the El Paso-Kinder Morgan deal. Segarra and other examiners had been pressing Goldman for details about the merger for months. But it was from news reports about the shareholder lawsuit that they learned the lead Goldman banker representing El Paso, Steve Daniel, also had a $340,000 personal investment in Kinder Morgan, Segarra said.

[..] At the New York Fed, Goldman told the regulators that its conflict-of-interest procedures had worked well on the deal. Executives said they had “exhaustively” briefed the El Paso board of directors about Goldman’s conflicts, according to Segarra’s meeting minutes. Yet when Segarra asked to see all board presentations involving conflicts of interest and the merger, Goldman responded that its Business Selection and Conflict Resolution Group “as a general matter” did not confer with Goldman’s board. The bank’s responses to her document requests offered no information from presentations to the El Paso board discussing conflicts, even though lawsuit filings indicate such discussions occurred.

Goldman did provide documents detailing how it had divided its El Paso and Kinder Morgan bankers into “red and blue teams.” These teams were told they could not communicate with each other — what the industry calls a “Chinese Wall” — to prevent sharing information that could unduly benefit one party. Segarra said Goldman seating charts showed that that in one case, opposing team members had adjacent offices. She also determined that three of the El Paso team members had previously worked for Kinder Morgan in key areas. “They would have needed a Chinese Wall in their head,” Segarra said.

[..] In April, Goldman assembled some of its senior executives for a meeting with regulators to discuss issues raised by documents it had provided. Segarra said she asked [Michael] Silva [senior supervising officer for the Fed at Goldman] to invite officials from the SEC, because of what she had learned about the El Paso-Kinder Morgan merger, which was awaiting approval by other government agencies. Segarra said she and a fellow examiner from New York state’s banking department had prepared 65 questions. But before the meeting, Silva told her she could only ask questions that did not concern the El Paso-Kinder Morgan merger, she said.

[..] As the Goldman examination moved up the Fed’s supervisory chain, Segarra said she began to get pushback. According to her lawsuit, a colleague told Segarra in May that Silva was considering taking the position that Goldman had an acceptable firm-wide conflict-of-interest policy. Segarra quickly sent an email to her bosses reminding them that wasn’t the case and that her team of risk specialists was preparing enforcement recommendations. In response, Kim [her supervisor] sent an email saying Segarra was trying to “front-run the supervisory process.”

October 28 2013:

So Who is Carmen Segarra? A Fed Whistleblower Q&A

After getting a master’s degree in French cultural studies at Columbia’s campus in Paris, she went on to law school at Cornell. She then spent 13 years working at different financial firms, including Citigroup and Société Générale. Outside of the office, she held leadership positions in the Hispanic National Bar Association. Hired by the Fed as a legal and compliance specialist, she was told to pay particular attention to how Goldman was complying with the Fed’s requirements on conflicts of interest. Segarra says she was fired after she found that Goldman lacked an adequate company-wide policy to manage conflicts of interest — and after her superiors urged her to change this finding and she refused.

Dec 6 2013:

New Allegations from Fired Examiner Describe Chaotic Workplace at New York Fed

Segarra claims she was terminated for refusing to change her finding that Goldman Sachs did not have appropriate policies for handling conflicts of interest in its business dealings. Her complaint alleges that the senior supervising officer for the Fed at Goldman, Michael Silva, and his deputy, Michael Koh, obstructed her examination of Goldman on several occasions. Silva, who had worked at the New York Fed since 1992, left last month to take a job as the chief regulatory officer and compliance leader of GE Capital. That firm is one of the Too-Big-to-Fail financial institutions regulated by the New York Fed.

[..]While at the New York Fed, Segarra had a direct supervisor, Jonathon Kim, who oversaw legal and compliance specialist examiners stationed at several banks. According to the amended complaint, Kim, also a defendant, told Segarra that the Fed “had failed to clearly articulate the different roles of [the relationship managers] and bank examiners.” When Segarra complained about the obstruction, the complaint says, Kim told her she needed to learn “the critical skills of ‘absorbing and diffusing.’” “They allowed this lack of clarity to interfere with Carmen’s bank examining activity,” said Segarra’s attorney, Linda Steagle. “In fact we are saying that this amorphous structure exists, in large part, so they can do exactly that.”

[..] In an addition to the amended complaint, the parties this week filed a joint letter detailing a trial schedule that is expected to stretch into next year. The letter discloses that Segarra possesses “audio recordings of several meeting with defendants” and suggests that they might assist the Court if there are disputes over facts in the case. The New York Fed is one of 12 regional reserve banks that form the Federal Reserve System. It is the largest such bank in terms of assets and volume of activity, according to its website. While the New York Fed is a private bank, the Federal Reserve’s Board of Governors in Washington, DC, delegates a public regulatory function to it.

April 24 2014:

Judge Tosses Retaliation Lawsuit by Fired N.Y. Fed Examiner

U.S. District Judge Ronnie Abrams in New York ruled late Wednesday that the assertion by Carmen Segarra that supervisors retaliated against her failed to fall within the whistleblower statute under which she filed her case. The law, enacted in 1989 after the savings and loan crisis to protect bank examiners from outside interference, covers an individual who “discloses protected information to a third party, not when she is asked to alter that information,” the judge ruled. In October, [Segarra] filed a wrongful termination complaint naming the New York Fed and three of its officials.

The judge dismissed the claims against the three officials, saying the law could only be used to file lawsuits against institutions and not individuals. Known as the “depository institution employee protection remedy,” it safeguards examiners who “provide information” about “any possible violation of any law or regulation.” In her ruling, Abrams also concluded that the Fed guidance Segarra cited — that Goldman Sachs have a firm-wide conflicts-of-interest policy — was only advisory and not a law or regulation. As such, it was not covered under the statute, the judge decided.

[..] Abrams’ ruling also recounts how, earlier this month, the judge disclosed to the parties in the case that her husband, Greg Andres, a partner at the law firm Davis Polk & Wardwell in New York, was representing Goldman Sachs in an advisory capacity. During a telephone conference, Abrams asked lawyers for the Fed and Segarra if they wanted to her to recuse herself or consult with their clients. The revelation came the day before oral arguments on a motion by the New York Fed to dismiss the case. During the call, both sides declined to request a recusal.

After the arguments, however, Segarra’s lawyer sent out a list of questions asking about the relationship of Andres with Goldman Sachs. In her ruling, Abrams said the questions came too late and gave the appearance that Segarra was shopping for another judge. “Such an attempt to engage in judicial game-playing strikes at the core of our legal system,” the judge wrote. Abrams had also previously worked at a law firm with the Fed’s lead counsel in the case, but the judge said that the two “didn’t work together closely.”

September 26 2014:

Inside the New York Fed: Secret Recordings and a Culture Clash

Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards. The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown. New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better?

So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret. After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation’s biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.

Beim provided a path forward. He urged the New York Fed to hire expert examiners who were unafraid to speak up and then encourage them to do so. It was essential, he said, to preventing the next crisis. A year later, Congress gave the Federal Reserve even more oversight authority. And the New York Fed started hiring specialized examiners to station inside the too-big-to fail institutions, those that posed the most risk to the financial system. One of the expert examiners it chose was Carmen Segarra. Segarra appeared to be exactly what Beim ordered.

Passionate and direct, schooled in the Ivy League and at the Sorbonne, she was a lawyer with more than 13 years of experience in compliance – the specialty of helping banks satisfy rules and regulations. The New York Fed placed her inside one of the biggest and, at the time, most controversial banks in the country, Goldman Sachs. It did not go well. She was fired after only seven months. Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn’t fit the statute under which she sued.

At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses. Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed’s culture at a pivotal moment in its effort to become a more forceful financial supervisor.

The recordings make clear that some of the cultural obstacles Beim outlined in his report persisted almost three years after he handed his report to Dudley. They portray a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority while integrating Segarra and a new corps of expert examiners into a reorganized supervisory scheme.

Segarra became a polarizing personality inside the New York Fed — and a problem for her bosses — in part because she was too outspoken and direct about the issues she saw at both Goldman and the Fed. Some colleagues found her abrasive and complained. Her unwillingness to conform set her on a collision course with higher-ups at the New York Fed and, ultimately, led to her undoing.

In a tense, 40-minute meeting recorded the week before she was fired, Segarra’s boss repeatedly tries to persuade her to change her conclusion that Goldman was missing a policy to handle conflicts of interest. Segarra offered to review her evidence with higher-ups and told her boss she would accept being overruled once her findings were submitted. It wasn’t enough.

Home Forums The US Has No Banking Regulation, And It Doesn’t Want Any

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    Marjory Collins Traffic jam on road from Bethlehem Fairfield shipyard to Baltimore April 1943 It is, let’s say, exceedingly peculiar to begin with tha
    [See the full post at: The US Has No Banking Regulation, And It Doesn’t Want Any]

    article title is “America Banana Republic”. We are just getting proof of endemic corruption now.

    Diogenes Shrugged

    Obama is a wonderful example of a teleprompter-reading, selfie-snapping, fairway-chopping, political-campaigning professional confidence man (i.e. crook). He’s proof that CIA grooming and good dentistry are all it takes … wait for it … to be the President of the United States of America (all rise, throw your hats in the air and cheer). Face it, had his front teeth rotted prior to 2008, maybe while doing hard time for smoking marijuana (like half our world-record prison population), he’d have had as much of a shot at the White House as most crack addicts do. People elected his smile, not his character. He richly deserves an Academy Award or a spot in a glossy dental ad, but certainly not a Nobel Prize, much less the Presidency.

    Nobody is bright enough, much less busy enough, to run a country from the top, and Obama appears to do it without much effort at all. In other words, Obama is NOT running the country. He’s taking orders from more industrious types in the background who actually spend more time on nefarious plans than they do with posing.

    POTUS is not a position anybody should waste time voting for. It’s more akin to Head Boy in a grade school setting or Queen for a Day on 1950’s television. It’s a cardboard cut-out, a smoke screen, a ruse, a lie. This country’s government is a sack of flaming shit on the doorstep of the electorate, and the electorate is dutifully stomping on that sack to put the fire out. Okay, bad analogy, but what I wanted to say would probably land me in jail.

    Ilargi just correctly told us who runs the country (as if you didn’t already know by this time). In fact, they run the world. They cannot and will not be prosecuted when accomplices like Holder (and soon, Big Sis) prioritize bogus race issues and clandestine gun running to Mexican cartels over justice for white collar banking crime. (Are there still lamp posts in most major cities, or did the banksters make sure those disappeared long ago?)

    Ebola is the only possible solution, and it’s a long shot. Pray it takes this criminal class down with the rest of us. From what Ilargi has written lately, it appears certain they’ll handily survive a long overdue, epic deflationary collapse. All that’s left is natural causes, even if the allegations of some strains of Ebola being GMO are true.

    Stock up on food, firearms, ammo and Chlorox. And booze. You’re gonna need a whole boatload of booze.


    It’s been many years, decades perhaps, that a President has run the U.S. from the top. Maybe never. Most people still believe we live in a democracy too. Liberty and justice for all. Uh, no.

    Diogenes Shrugged

    I keep reading pundits who ominously portend the “death of the dollar.” BRICS nations are rapidly displacing dollars as the international reserve currency, they darkly warn.

    I have two words in response. Horse and shit. Preferably spoken in together in succession with scorn in my voice.

    Their mistake is arithmetic, but why bother with arithmetic when your guru status as a blogger demands hysterics?

    Let’s see here. Other countries forsaking dollars (debt dollars, at that) means hundreds of billions or trillions of dollars will soon come “flooding back to the U.S.” and cause H’inflation, right? Right? Isn’t this conventional wisdom by now?

    But QE is ending, meaning deflation, right? Throw in a little dark-complected signet and maybe a deflationary collapse, right?

    Add them together and … and …. oh. Shucks. Interesting times aren’t that interesting after all. Hmm … Do you suppose somebody at the Fed actually got something right for once? I’m not saying the math is perfect, but maybe the almighty dollar isn’t in much jeopardy after all.

    Stoneleigh and Ilargi aren’t the only people who’ve understood the mounting economic Tower-of-Babel correctly (in my opinion), but they’re the very best purveyors of that understanding I’ve found. I can’t begin to tell you how fortunate I feel for having found this blog. I would really hate living in a world where misconceptions reign, and only misconceptions reign.

    But they’re completely misguided when it comes to climate change. Close to perfect, but not quite.


    Diogenes Shrugged, H’inflation in the final denouement, the last stage of a deflationary collapse. They are not opposites, though they are often presented as such by hysterical bloggers. Keep an eye on the proportion of base money to total money supply.

    Note that even Michael Pettis, who hardly qualifies as a sensationalist blogger, predicts a major near term change in the role of the dollar in the most recent post at his blog.

    And another astute blogger over at Golem XIV asks the question what will happen if the next crisis comes before we have recovered from the crisis we are still in? I think there are some variables that could speed up the course of history in a way that might surprise us all. It’s way too early to call this game IMO.


    Can’t bank on much these days, can we?

    Oh, other than political opportunists like Lizzy jumping in front of the parade, and of course, whatever personna in the image of a new, improved, politically anointed Attorney General is foisted upon us.

    So, I guess we’ll have to bank on ourselves.

    Will that be “Full Faith and Credit Federal Reserve IOU’s” or is the faith finally wearing a bit thin here?

    Ron Paul, Griffin and myriad others have been warning of all this for decades, but it is just now making the fringe edges of public perception.

    With jaw dropping amazement, enlightenment comes, one by one, with “We didn’t think our government would ever do this to us.”

    Nothing to do now but await the lid, to be slammed down on all this to take it out of sight and mind. National security, mind you.

    Well, I learned many years ago what the US Corporatocracy and it’s MIC was capable of,,,never mind, you don’t want to hear it.

    No one likes war stories.

    Murrow might say, Good night and good luck.


    Folks, thi sis **really** simple.
    Who controls the Federal Reserve?
    The title includes “owns” but that is a red herring. It doesn’t matter who owns it or if it is owned at all… what matters is WHO CONTROLS IT.
    The Big Banks CONTROL the Fed. This is how the stock structure was set up – to guarantee that the OWNERS of the Big Banks and, in case you didn’t know, THE “OFFSPRING” (literal and figurative) OF THE ARCHITECTS OF THE DEBT MONEY FEDERAL RESERVE SYSTEM.
    WHO finances the country? The Debt Money Monopoly through the Big Banks that own stock in the Debt Money Trojan Horse Federal Reserve System.
    WHO finances the major media? The Debt Money Monopoly. Sure, about six megacorps control the major media, BUT THE DEBT MONEY MONOPOLY FINANCES EVERY ONE OF THEM THROUGH THEIR CARTEL OF MEGA BANKS.
    WHO finances good press for their political operatives and bad press for their political enemies?
    WHO is the #1 financier of political campaigns?
    WHO finances the Democratic AND Republican AND libertarian political apparatus?
    Yeah, this isn’t rocket science, people.
    Anyone with a clue would be **shocked** if the big banks or the Fed were actually held accountable for their crimes.
    The Fed has broken Section 2A of the Federal Reserve Act and lies about a “dual mandate” when the expected results of following the mandate are triune (not even dual!) and the mandate itself if singular.
    However, the previous sentence is far to complex for even PhD level people to comprehend due to the Orwellian Crimestop and “Ignorance is Strength” Zeitgeist that pervades societies across the globe.
    Then again, people understand intuitively that if they don’t execute the mind and the works of the Debt Money financed and controlled Beast System, their ability to “buy and sell” will be greatly compromised.

    “When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”
    ~ Napoleon

    “If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.”
    ~ Robert Hemphill, Credit Manager of Federal Reserve Bank, Atlanta, Ga.
    Source: In the foreword to a book by Irving Fisher, entitled 100% Money (1935)

    “The Money Power Seeks to Create a World System of Financial
    Control in Private Hands Able to Dominate Every Nation on Earth
    In addition to these pragmatic goals, the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank, in the hands of men like Montagu Norman of the Bank of England, Benjamin Strong of the New York Federal Reserve Bank, Charles Rist of the Bank of France, and Hjalmar Schacht of the Reichsbank, sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”
    ~Carroll Quigley, Tragedy and Hope (circa 1966)

    Quigley was the only historian given unfettered access to the Council on Foreign Relations historical documents – in essence he is the Debt Money Monopoly’s chosen historian for the technocracy. This book wasn’t supposed to make it out into the public domain, but it doesn’t matter because the masses are so brainwashed and apathetic almost nobody will read the book and, of those who do, almost nobody will believe it. It is the “playbook” of the dElites that run society. They literally tell you how they run the world in that book – or at least most of it. Their technocracy is still compartmentalized to a degree.

    This is a good place to start getting into Tragedy and Hope… it is action packed if you know what you are reading…


    Prof, Paul and Griffin are wrong in their analysis, which is basically a repeat of the Mises “analysis.” Mises was financed by the Rockefeller Foundation – look it up. This doesn’t mean Mises was “in on it,” but it does mean that whatever Mises was saying played will in the Rockefeller “playbook.”
    Money is debt. I don’t think the Mises crowd understands that. I also don’t think they understand Weimar and Argentina from the perspective of the Debt Money Monopoly for, if they did, they would tell people that Weimar and Argentina WERE DEFLATIONARY from the perspective of the Debt Money Monopoly. Once everyone in those countries was impoverished through the debasement of their local currency, the Debt Money Monopoly could swoop in and buy up the country for pennies on the dollar as denominated in EXTERNAL CURRENCY.
    What the Mises crowd doesn’t understand, their Achilles Heel, if you will, is that the Debt Money Monopoly NEVER HYPER-INFLATES WHEN THEY HOLD THE MAJORITY OF MONEY AND DEBT PAPER.
    Never. Ever.
    Never ever.
    Never ever ever.
    You can’t find a single example of them ever doing it because it would be STUPID. They would, in effect, bail out those they criminally put into debt through fraud by destroying their own personal wealth.
    Uh, not gonna happen.
    You will have to worry about an American dollar hyperinflation only after one of two things occurs – 1. The Debt Money Monopoly’s money and debt paper is denominated in something other than American debt receipt dollars or 2. The Debt Money Monopoly has divested themselves of their cash and debt paper and turned it into physical goods (like American consumer homes after they are foreclosed on – fraudulent mortgage paper and all).
    Nicole and Raul are correct – there will be a deflationary spiked pit ahead of the deflation precisely for the reason I outline above.
    While I really like Griffin and think Paul has some good ideas, they are playing the role of Lenin’s useful idiots here. They haven’t thought this out all the way and they don’t know they haven’t thought this out all the way.
    The concept of “losing confidence in the currency” is absurd on its face.
    society has X currency and X+Y debt BY DEFINITION. The Y is the net money position of the Debt Money Monopoly and their cartel of mega corporations and even pension funds that are in line to be looted.
    If society loses confidence in its currency, THEIR DEBTS WILL GO UNPAID.
    That means they lose their houses, their farms, their cars, their businesses, etc…
    Anyone believing that they can “lose confidence” in their mortgage or their car payment while maintaining possession of their mortgaged property hasn’t thought this through very well.

    “The best way to control the opposition is to finance it.”
    ~Updated Vladimir Lenin quote


    Trumvium, let’s think this through. Obviously Mr. Middle Class with the mortgage and a modest net worth is not the person whose marginal vote counts when deciding whether to maintain confidence in the currency or lose it. If he has debt he needs currency to repay the debt, so he does not have the luxury of being choosy. During good times he may have stashed away a few gold coins to get some wealth out of the banking system, but probably not enough to over all those unpaid obligations. His vote is obviously not the one that counts.

    “Ah, but I am one step ahead of you” you say as you rightfully point out that the vast majority of dollars are borrowed into existence, and all those borrowed dollars are what supports asset prices of . . . everything. Collectively all of those so called rich people holding plenty of equity in their homes and everything else stand to lose everything if asset prices of everything go down the toilet in a deflationary collapse. Imagine that all debt suddenly vanishes and every asset in the country crashes down to its cash price, as a proportion of all the tangible currency out there. You might be able to buy a home for $100. Of course that would never happen. Nobody would allow it to happen. It would be the end of the world, right? Of course not, but it sure would feel like the end of the world to anyone who thought they had some assets. But imagine it did happen. All of the assets in the real physical world would still be here. They would just be valued differently.

    Something is going to happen on the way to that $100 house to prevent that outcome from ever happening. Can you guess what it is? People will demand that the government and the central banks step in and do something. What can they do? They can pay nominal prices for all debt to save the debt at all costs. When they do that they replace credit money with base money.

    “Ah, but I am one step ahead of you” you say once again as you rightfully point out that printing all that base money does not cause hyperinflation as long as the money simply sits in the bank and never gets spent into the economy. But as the relative proportion of base money increases compared to credit money, the risk grows. Ultimately it will be those who control that mountain of base money who decide whether to hold it or exchange it for things in the real world. But I submit that they do not need to be fully divested, not even close, for the hyper-inflationary spiral to have passed the point of no return.

    And I think that the next time around the shock will be bigger and faster than in 2008, and that the next deflationary shock will not be a simple rerun, but will be a different experience altogether if people lose confidence in central bank omnipotence.

    I will add a third possibility to your list as a potential trigger for a loss of confidence in the dollar, and that is a delivery failure in the gold futures market. If there is ever a run on the bullion banks, the next phase of history will be ushered in faster than any of us ever thought possible.


    Well, the judge did ask whether both sides wanted her to recuse herself; they declined. But she only asked the day before oral arguments to dismiss the case, hardly enough time to consider. Besides, what are you going to say to a judge? Yes, get the heck off the case? The judge was a little late in asking, don’t you think?

    The judge also did not find grounds under the Whistle Blower Statute, but I’m sure grounds can be found under some other statute that will stick because it’s evident to me that Segarra got fired because she didn’t play ball the way they like it played – catching the ball and then dropping it on purpose.

    Spent part of last night reading about the case. It stinks.


    “Under the deal, Santander transferred some of the shares it held in its Brazilian subsidiary to Goldman. This effectively reduced the amount of capital Santander needed. In exchange for a fee from Santander, Goldman would hold on to the shares for a few years and then return them. The deal would help Santander announce that it had reached its proper capital ratio six months ahead of the deadline.

    In the recordings, one New York Fed employee compared it to Goldman “getting paid to watch a briefcase.” Silva states that the fee was $40 million and that potentially hundreds of millions more could be made from trading on the large number of shares Goldman would hold.

    Santander and Goldman declined to respond to detailed questions about the deal.

    Silva did not like the transaction. He acknowledged it appeared to be “perfectly legal” but thought it was bad to help Santander appear healthier than it might actually be.

    “It’s pretty apparent when you think this thing through that it’s basically window dressing that’s designed to help Banco Santander artificially enhance its capital position…”

    Transparency at its finest! How is this any different than getting paid to hide a smoking gun for someone until the heat dies down? Santander should be charged with fraud, and Goldman should be charged with aiding and abetting.

    Sociopaths don’t like rules and regulations. They’re sticky little things that get in the way of their money-making.

    V. Arnold

    I find the conversation interesting only in lieu of the obvious engagement by so many who do not understand the game. It’s rigged, fixed, crooked, and corrupt.
    My younger sister just returned to the states after working abroad for a year (teaching English). She was fortunate and found decent employment. It’s a school district so it’s only 8 months full time; summers off, no pay.
    At 65 in Nov., she’s looking for investment opportunities; financial planners, brokers, etc.
    And this is my point; what chance has she in the markets (or whatever one calls them)?
    Zip, zero, zilch, IMO.
    I have advised her (strongly) to join a credit union and open a CD (if they still exist). I have advised her to stay away from all banks and the financial charlatans.
    There is nothing out there for “us”, except possibly credit unions.
    That this isn’t evident, much less obvious, just boggles the mind…mine…


    “I think by the time we get finished with this case and we have our trial, we’re going to have the full picture on everything that occurred regarding the government’s rescue of A.I.G.,” said Thomas C. Wheeler, a federal judge. “Why did they do it the way they did here?” […]

    I am not arguing that A.I.G. was an innocent in the economic debacle of 2008. But unlike its trading partners, it neither created garbage mortgage securities nor peddled them to unsuspecting investors. Its error — a whopper for sure — was not recognizing that it was the patsy at the poker table when it insured those troubled securities. Which brings us back to Judge Wheeler’s question: Why did the government do what it did in the A.I.G. deal?”

    Read on. By bailing out A.I.G., the government essentially got to bail out the banks. I think that’s common knowledge. But Bernanke, Geithner and Hank Paulson will all have to testify in court. I’m sure they’ll elect to affirm and not swear on a Bible.

    The article’s author states that A.I.G. “was the patsy at the poker table when they insured those troubled securities.” I’m not so sure about that. I remember reading a great article (I think it was from The Village Voice) describing one Joseph Cassano.

    “The heart of darkness was the AIG Financial Products (AIGFP) office in London, where a large proportion of the derivatives were written. AIG had placed this unit outside American borders, which meant that it would not have to abide by American insurance reserve requirements. In other words, the derivatives clerks in London could sell as many products as they could write-even if it would bankrupt the company.

    The president of AIGFP, a tyrannical super-salesman named Joseph Cassano, certainly had the experience. In the 1980s, he was an executive at Drexel Burnham Lambert, the now-defunct brokerage that became the pivot of the junk-bond scandal that led to the jailing of Michael Milken, David Levine, and Ivan Boesky.”

    Cassano made an absolute fortune and served absolutely no jail time for what he did. The following is not the article I was looking for, but highlights the dangers of derivatives and goes over the whole sordid mess. “Cassano resigned from his position at AIG FP in March 2008, having pocketed $280 million in cash and an additional $34 in bonuses. He even managed a $1 million-a-month retirement package that kept him on at AIG as a “consultant”. The big banks knew they were insuring junk, and Cassano knew it too.


    I had a chuckle yesterday when the NY Times did an expose of a Russian bank that was doing quite well since it is closely associated with Kremlin/Putin insiders. Thank God there is no similar situation here. (sarcasm alert) (The nominal difference is the Russian bank is new while ours have roots going way back since instead of setting up a quasi public bank as a central bank Russia was busy with a revolution)

    Virtually every Putin/Russia Ukraine story in The Times could appear in the Russian press with American/European and Russian names switching places on who are the bad guys and they would be equally as factual, or less. The Times is all in on the war with Russia in other words and is virtually propaganda central to drum up support for it. Far more so than the Iraq thing, whatever you call it. Where Judith Miller was a direct pipeline to whatever was coming out of Cheney’s shop. (Later embedding and actually semi taking over the hunt for WMD’s which lead to her being named The Queen of all fucking Iraq by Duncan Black)

    What the purpose of Iraq was I will never know but the war with Russia is a more difficult puzzle for me. I see the Russia stock market is at multi year lows. We’re winning!


    rapier – “…with American/European and Russian names switching places on who are the bad guys and they would be equally as factual, or less.”

    They’re all the same. It doesn’t matter what country, what type of government. The elite look after their own no matter where they are, whether it’s communist China, capitalist West, etc. They all denounce each other, try to get their citizens all stoked up about the evils of a particular type of government, but snakes don’t care about borders. They slither anywhere.


    Well sure but is the NY Times supposed to be Pravda and Izvestia all rolled into one? That’s the point. Shouldn’t the West have a higher standard? Naive I suppose. When it comes to empire the US press has always been for the home team.

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