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The Confidential Memo at the Heart of the Global Financial Crisis
The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.
Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”.
Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.
But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?
The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet -- in one single move. It was as brilliant as it was insanely dangerous.
What could possibly go wrong?
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How could they pull off this mad caper? The bankers' and Summers' game was to use the Financial Services Agreement (or FSA), an abstruse and benign addendum to the international trade agreements policed by the World Trade Organisation.
Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products”.
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.
The only nation with the balls to stand up to the banksters was Brazil which was threatened with an all out trade embargo by the EU. They stood their ground and, as a result, were one of the only nations in the world to ride out the financial mess of 2007-09 with minimal damage and, by some accounts, even thrived while the rest of the world imploded.
They destroyed the regulations governing banking and made it so that no nation could protect itself from their irresponsible practices. In no time, they turned the banking and financial industries into a huge casino operation where the house (the banksters) always wins and the rest of us are always left shouldering the burdens of any losses.
Which also makes sense why tax payer money was stolen from us to also Bail Out Foreign Banks.
Great info OP. The Federal Reserve and their "too big to fail banks"-Goldman Sachs, JP Morgan, Wells Fargo, Bank of America, Citi are a criminal enterprise worse than any on Earth.
Which is why Glass-Steagall needs to be reinstated. Unfortunately, in today's poisonous partisan political atmosphere, it'll never happen.
When the Bankers own both parties, they are not going to do anything to decrease their power or wealth.
They profit handsomely from all the trade policies and economic plans at the expense of this nation.
The Banksters and Wall Street thieves say everyone has to take a cut in pay and lifestyle in this global economy, but you won't see them taking a cut. On the contrary, they are raking it in and the current arrangement is exactly how they want it at our countries expense.
When the Bankers own both parties, they are not going to do anything to decrease their power or wealth.
They profit handsomely from all the trade policies and economic plans at the expense of this nation.
There is a bipartisan bill before the Senate -- sponsored by John McCain (of all people!) and Elizabeth Warren -- that would reinstate Glass-Steagall. But because Warren is involved, it's a non-starter as far as the GOTP is concerned.
There is a bipartisan bill before the Senate -- sponsored by John McCain (of all people!) and Elizabeth Warren -- that would reinstate Glass-Steagall. But because Warren is involved, it's a non-starter as far as the GOTP is concerned.
I would be extremely surprised if anything passed, or passed and was not watered down to being completely ineffective. We are being ruled by Financial Terrorists that have hijacked our government for their own selfish gain, rather than for the best interests of this nation.
Tiny piece to the bigger picture. Of course, these are just those that occurred in that time frame, but are very significant in the overall scheme.
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Originally Posted by CDusr
Big leaps in the recent bubble blowing.
Interesting when you look at human resources and changes in the 90's along with major changes in global markets, i.e. derivatives via Gramm–Leach–Bliley Act (Also known as Financial Services Modernization Act of 1999), Commodity Modernization Act,(2000)etc... First comes the "public" internet around 1995 then the market changes then from around 2000 to fairly recently -33% manufacturing outsourcing.
Great info OP. The Federal Reserve and their "too big to fail banks"-Goldman Sachs, JP Morgan, Wells Fargo, Bank of America, Citi are a criminal enterprise worse than any on Earth.
Palast does interesting work. Keep in mind though who the largest shareholders of those Corps are.
We just have had mad Deriv clearing, Basel III compliance pressure and apparently some recent closed door meetings. I would keep an eye on some larger changes coming down the pike, very soon. Sept could be interesting. President urges swift action at meeting on Wall Street rules ... - The Hill
The bankers and Wall Street are running (and ruining) this country. We have got to stop supporting politicians who go along with this. We need campaign finance reform. The "regular guy" has zero influence and power.
Great info in the OP. Exactly why I knew Obama would be a total disaster as president. Rubin was a Clintonite, and sure enough, Obama followed suit. Taibbi nailed it.
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What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.
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