Banking On Banksters

I was gloomy as I saw what happened in 2008 and thereafter: the very financiers who had stolen all the money, were given trillions, to replace what they had stolen. It was as inconceivable as the worst horrors of history, but it proceeded.

In exchange the crooks did not even have to recognize they had been wrong. When it dawned on our unworthy leaders that it looked bad, all this giving from the poor to the richest fortunes in the world, they invented something else: easing money creation for top banks, so that they could “reimburse” the Public: that’s called “Quantitative Easing” (or “the Twist”, or…)

It’s a pleasure to now have Paul Krugman seeing the light, six years later, in “Springtime For Bankers”.  Oh, don’t jump for joy, yet. No, Paul is not seeing the light about “Quantitative Easing”, that’s still beyond what he can conceive at this point. But he has finally seen that the exalted status of banking itself is the problem, and, more generally that:

…”economic policy since the onset of the financial crisis has been a dismal failure. It’s true that we avoided a full replay of the Great Depression. But employment has taken more than six years to claw its way back to pre-crisis levels — years when we should have been adding millions of jobs just to keep up with a rising population. Long-term unemployment is still almost three times as high as it was in 2007; young people, often burdened by college debt, face a highly uncertain future.

Now Timothy Geithner, who was Treasury secretary for four of those six years… thinks he did a heckuva job.

He’s not unique in his self-approbation. Policy makers in Europe, where… a number of countries are in fact experiencing Depression-level distress, have even less to boast about. Yet they too are patting themselves on the back.

How can people feel good about track records that are objectively so bad?…

In both Europe and America, economic policy has to a large extent been governed by the implicit slogan “Save the bankers, save the world” — that is, restore confidence in the financial system and prosperity will follow…

Mr. Geithner’s book is devoted to a defense of the U.S. financial bailout, which he sees as a huge success story — which it was, if financial confidence is viewed as an end in itself… But where is the rebound in the real economy? Where are the jobs? Saving Wall Street, it seems, wasn’t nearly enough. Why?

One reason for sluggish recovery is that U.S. policy “pivoted,” far too early, from a focus on jobs to a focus on budget deficits. Mr. Geithner denies that he bears any responsibility for this pivot, declaring “I was not an austerian.” In his version, the administration got all it could in the face of Republican opposition. That doesn’t match independent reporting, which portrays Mr. Geithner ridiculing fiscal stimulus as “sugar” that would yield no long-term benefit.

But fiscal austerity wasn’t the only reason recovery has been so disappointing… there was, arguably, a lot the Obama administration could have done to reduce debt burdens without Congressional approval. But it didn’t; it didn’t even spend funds specifically allocated for that purpose. Why? According to many accounts, the biggest roadblock was Mr. Geithner’s consistent opposition to mortgage debt relief — he was, if you like, all for bailing out banks but against bailing out families…

…leading experts on this subject are the economists Atif Mian and Amir Sufi, whose just-published book “House of Debt” argues very much the contrary. On their blog, Mr. Mian and Mr. Sufi point out that Mr. Geithner’s arithmetic on the issue seems weirdly wrong — order of magnitude wrong — giving much less weight to the role of debt in holding back spending than the consensus of economic research…

In the end, the story of economic policy since 2008 has been that of a remarkable double standard. Bad loans always involve mistakes on both sides — if borrowers were irresponsible, so were the people who lent them money. But when crisis came, bankers were held harmless for their errors while families paid full price.

And refusing to help families in debt, it turns out, wasn’t just unfair; it was bad economics. Wall Street is back, but America isn’t, and the double standard is the main reason.”

Some hold that Timothy Geithner is creep central. This plutocrat got his jobs because of his connections, and is now president of “private equity” (understand: conspiracyplutocratic central) firm Warburg Pincus. Obama was forced to select the 2008 crisis maker Geithner over his spiritual father, the extremely well connected Lawrence Summers, because Summers’ towering reputation as a sexist, derivatives and plutocratic fiend, was so colossal that even the powers that be cringed.

It’s true that, as chief of the New York Fed, Geithner was the prime proximal architect of the 2008 crisis, so hell could not have been in better hands.

Last week, the New York Times censored by comments about “glaciers disintegrating”, probably because the message that the melting would go faster by one order of magnitude than announced, did not go down well.

This time, one deigned to publish me (progress: in the past such a comment on finance would have been censored). Here it is (beefed up):

“Save the bankers, save the world?” It is worse than that. The bankers are who create the money, and they do so, by re-distributing it, to whom, and what, they feel worthy.

The financial crisis 2008 revealed that bankers had lent the money to unprofitable projects, on such a scale that banks went bankrupt.  In the European Union, and the USA.

It’s true some of the money, in the USA, was lent directly to families who could not pay back anymore the debts they had incurred. How did this happen on such a scale? Because those millions of home owners had been tricked into incurring these debts by misrepresenting the payments those people would have to make.

Thus the bankers behaved like gangsters. However, in spite of the colossal misery they caused, none of these gangsters was prosecuted.

Moreover, bankers had also created a lot of money they lent for highly leverage financial derivatives operations that went very wrong (they went wrong, in part because, by all betting that what they thought could not happen would not happen, the bankers made sure that it would happen). An example of this hedging gone wrong is the bankruptcy of American International Group, AIG (that cost nearly 200 billion dollars).

The futility of separating one side of the Atlantic from the other was made blatant by AIG. The specific unit of AIG that leveraged AIG into oblivion was operating from London.

Highly leverage derivatives was another way bankers went wrong. Those derivatives, in particular the financial ones, dwarf the real economy.  This means the banks are financing a virtual economy, not the real one.

The same phenomenon festers in Europe. The money was not lost for everybody, though: the richest have got much richer.

Rogue bankers create money for themselves and their friends. The public is then asked to bring fresh money to refloat the banks that the bankers and their friends just stole. Then innocent entities get accused (subprime mortgage holders, the Euro, etc.)

In New York, one, just one junior trader was prosecuted for the 2008 crash. He was French, of course. In France Jerome Kerviel was condemned to three years in jail (and initially a multi-billion dollar fine), for having, allegedly,  lied to his employer.

It has not struck the corrupt mind of “justice” that it’s a corrupt organization that allows just one man to trade 80 billion dollars. A corrupt organization in a corrupt system.

Kerviel indeed vociferously asserts that there was an extensive conspiracy to protect Societe’ Generale, one of the world’s biggest bank.

Meanwhile American justice pursues criminally some Swiss bankers. Swiss bankers are from a country small enough to eat raw. French bankers are another matter, and American bankers are, naturally untouchable (American banks are made to pay fines… from QE).

The European economy has been ravaged to give as much money to the bankers and their accomplices as what they had just stolen. And this “austerity” is still going on. Tellingly, in Europe, only the far left and far right parties are starting to understand the extent and nature of the theft, and talk about it. No wonder that they will progress in the European elections, because, increasingly, people are starting to understand the truth. Hey, Nobel Laureate Paul Krugman is nearly there!

The bankers have been saved. The world is therefore still at their mercy.  “Save the bankers, save the world” is in truth: ”Save the gangsters, save the world”. This financial plutocracy is there to stay, We The People are left to pray. On our knees.

Patrice Aymé

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11 Responses to “Banking On Banksters”

  1. Jonathan, trusted commenter from the New York Times Says:

    Jonathan
    is a trusted commenter from the New York Times in NYC:

    Some did, some didn’t.

    Wells, Chase, and US Bank didn’t. They’re still in business.

    Lehman, Bear, Countrywide, and WaMu did. These banks no longer exist.

    • Patrice Ayme Says:

      This is typical of New York Times-New York Plutocratic propaganda. First, the New York Times prevented me from answering that extremely biased and otherwise completely idiotic disinformation.

      So common readers will believe that Jonathan said something intelligent. In truth, he said something vicious. And that’s why I could not be allowed to answer him. Jonathan the vicious, thus trusted commenter.

      My complaint was about the bankers and banksters themselves, not about the banks. Telling me some banks went down is not the subject. Several banks go bankrupt every week, week after week, year after year, decade after decade. More get bought. It’s business as usual.

      Jonathan confuses normal business and gangsterism. Maybe he does not know the difference?

      Countrywide and WaMu went down before the 2008 crisis, and were absorbed by other banks.
      Nothing to see there, Jonathan.

      Lehman three top guys extracted FIVE BILLION dollars when Lehman crashed. That’s what I am talking about. Those guys were not prosecuted (although the USA lost dozens of billions in the Lehman’s annihilation). Why? Because they are part and party of the plutocracy. If nothing else, they know where some of the bodies are buried.
      PA

  2. Roger Henry Says:

    The banks are doing famously, American families are deep in debt. That debt, on the banks ledger is an asset . Slavery of the American public to college, auto, home and vacation loans is the banks bread and butter. Why would Geithner, being the banksters hand maiden, undertake any programs to interfer with that method of milking the slaves?
    Derivative income comes from milking those who think they are financially sophisticated ,but don’t realize the larger game in which they are entangled.
    In a weekend interview, Geithner was asked if he would ever return to government service. His answer was “No, the pressure from the 300 was too great” Freudian slip? Is that the 300 who make up the .01% that is gaining most wealth in the American economy?

    • Patrice Ayme Says:

      Tiny Tim is telling the truth for once… Somebody among the uppities today told me I better shut my mouth, and reminded me kin

    • Patrice Ayme Says:

      Derivatives are milking everybody: universities, pensions funds, banks (which are actually privately managed government entities), shadow banks, and even the government directly (remember “Long Term Capital Management“?)… The reason they thrive is that they are one of the major tools of the plutocracy.

  3. Roger Henry Says:

    You are correct Patrice about who is being “milked ” by derivatives. My point is, that a great portion of the people managing these funds for the public are lead around by “advisers” from the banksters who are steering them to this trash by claiming it is treasure.

    • Patrice Ayme Says:

      Dear Roger: Maybe they want to be led around. Maybe they want to do the corrupt thing, because they get some returns from it. Watch Geithner: well rewarded now. Now pension fund managers may want to please him by dealing nicely with him, and, in turn, being viewed as good guys. Good guys get good jobs, bigger houses, better cars, better schools for their children, Harvard maybe?…
      PA

  4. gmax Says:

    The rich talk, we listen. AS you said, only the rich talk, most talking heads are connected to wealth. For example, Charlie Rose. And people do not suspect it.

    • Patrice Ayme Says:

      Money talks in more ways than one. By the control they exert… Geithner’s “300” make sure that only what is compatible with them expresses itself loud enough to be heard.
      That brings the question of why the repression was so intense in 1500 CE + or – 300 years… Only bcs people were asked to believe what was so unbelievable, it was all important not to reveal the emperor had no clothes…
      PA

  5. Banking On Banksters | Patrice Ayme's Thoughts | Says:

    […] Read more here: Banking On Banksters | Patrice Ayme's Thoughts […]

  6. Patrice Ayme Says:

    [Sent to Business Week.]

    Ever since the Neolithic, it was necessary to invent taxation for just one reason: prevent a few from owning everything. Right now, this necessary function is inoperative, mostly because the hyper rich is allowed to hide money, including through “dark pools”, tax havens (the USA being the largest) and anonymous companies.

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