Update: (July 1): The alternative sites have just picked this up today July 1. See 321gold (via Press TV, Daily Reckoning)… Chuckle. You get the scoop here…
One more call for replacement of the dollar with SDRs, which will be under central management at the BIS (Bank of International Settlements). My notes in italics.
“A new United Nations report released on Tuesday calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value.
I couldn’t find any other convenient run-down of the evidence pointing to sabotage or extreme negligence in the BP oil spill, so I’ve linked PrisonPlanet.com’s report. I’ve checked the material and it’s well-sourced and confirms my own research, so I’m comfortable posting it. (more…)
For people who think passing a law or imposing a fine on some behavior invariably gets you less of the behavior or an improvement of it, try this heart-rending Natural News report:
“By now, almost everyone is aware of the out-of-control oil spill down in the Gulf of Mexico that seems to be getting exponentially worse with each passing day. But what people may not know is that BP’s efforts to control the oil by burning it are actually burning alive a certain rare and endangered species of sea turtle.
Reporter David Weigel’s feverish imaginings about the group he pretends to cover objectively have surfaced in emails sent to the liberal listserv, Journolist, according to Fishbowl DC (hat-tip to LRC blog).
Why am I not surprised?
Global-warming “scientists” turn out to be political hacks grinding over-sized axes; “educators” preaching “tolerance” and “love” turn out to be sexual Bolsheviks; green “activists” turn out to be shills for billionaire speculators…..(more…)
Will this be the future of the US? David Guyatt at Deep Black Lies on Russia immediately after the collapse of the Soviet Union:
GANGSTERS PARADISE
Organised crime in Russia is out of control. Criminal “brigades” own everything of value and can “acquire” any commodity in any quantity if the price is right. Ferocious criminal gangs ship out nuclear warheads with the same aplomb that they plunder train-loads of stolen bank-notes. Fearless and ingenious they even ripped-off Russia’s entire gold reserves.
“Former Clinton and Obama budget adviser Franklin Raines owns a key carbon-emissions patent he developed as CEO of the government-sponsored mortgage giant Fannie Mae, positioning him and his partners to make millions of dollars if it is used in any carbon-capping scheme implemented by the Obama administration.
From Bill Barrow at The Times-Picayune, June 18, 2010:
Gov. Bobby Jindal could face tough decision on opening his oil spill records
The House of Representatives voted 77-12 today to ratify Senate changes on a public records bill that would require the governor to grant public access to all state records related to the Gulf oil spill, putting Gov. Bobby Jindal in uncomfortable position politically.
Note 1: This web post by the anti-fascist author of several books on mind-control and propaganda, Alex Constantine, is perhaps a bit harsh in its conclusions. Taibbi might simply not know enough to steer clear of disinformation. Also, to be fair, he’s a more talented writer than Constantine gives him credit for being. (more…)
#1) Barack Obama has authorized the deployment of more than 17,000 National Guard members along the Gulf coast to be used “as needed” by state governors. So what are all of these National Guard troops going to be doing exactly? Are the troops going to be used to stop the oil or to control the public?
We can explain the rapid declines in homeowner wealth with the real estate bubble bursting in 2007, but how can we explain the general shifting in real estate capital structures going from 84% equity in 1945 to a mere 38% in 2010?
“In addition, Allied was not, as Einhorn claimed, a massive Ponzi scheme. Einhorn had made the smarmy suggestion that Allied was a Ponzi because it supposedly raised money from the markets to pay its dividends. An SEC official told the inspector general that this claim was patently false – it was perfectly obvious that Allied legitimately paid dividends out of earnings.
In the old days, people who did things for love of their community, for idealism, or for a cause they believed in, were in it just for that. They deserved the respect they got. Today, volunteer work has been festooned with all kinds of goodies, and, not unnaturally, it’s drawing people more interested in the goodies than the good. And not unexpectedly, the king of “doing well by doing good” - Goldman Sachs - is in the thick of it. (more…)
So now we know the real reason for the Afghan war.. I wonder how long the Pentagon has had this information? BBC reports on June 14, 2010:
“Afghanistan may have more than a trillion dollars worth of untapped mineral deposits, a spokesman for the ministry of mines has suggested. The statement came after reports in the New York Times of the work of a team of Pentagon officials and US geologists. They discovered large quantities of iron and copper as well as valuable deposits of lithium. However, questions are being asked about the timing of the release of the latest information.
Cassandra Anderson at Freedom Advocates sounds the alert about the underhanded push for “sustainable development” - Agenda 21 - through ‘Cap and Trade”.
(By the way, we’re all for sustainable development as long as it’s voluntary and comes without the heavy hand of the kleptocracy. So too we’re all for caring for the environment, choosing your family size wisely, reusing resources, and cultivating modesty, restraint, and thrift as essential components of the supremely capitalist moral virtue of prudence. But we’re not for any of these things when they’re hustled through surreptitiously as part of an agenda of top-down control and expropriation of people’s wealth and work). (more…)
“White House Chief of Staff Rahm Emanuel, WND has learned, lived rent-free in Washington, D.C., for years, thanks in part to a friend under contract with oil giant BP.
While the White House approaches “day 50″ of the environmental disaster caused by an explosion on BP’s Deepwater Horizon oil rig, unable yet to stop the flowing crude in the Gulf, several media sources have questioned the administration’s efforts to regulate BP prior to the incident.
Well, well, well. It looks like Patrick Byrne, Judd Bagley, Mark Mitchell and the rest of the estimable team at Deep Capture are having more than some effect.
In the July issue of Vanity Fair, legendary hedge-fund billionaire Steve Cohen tells special correspondent Bryan Burrough that he might be ready to walk away from active trading. How big would that be? Well, says Burrough, it’s “a little like saying that God is ready to walk away from Earth.” In this video, Burrough takes the measure of Cohen’s controversial careeer—and offers his theory on why the reclusive banker granted the second in-depth interview of his 30-year career to Vanity Fair.
Video 1: An interesting interview by Maria Bartiromo of Sir Evelyn de Rothschild on the financial crisis (December 2008). Here’s a quick break down of his main points: (more…)
“Two U.S. Securities and Exchange enforcement officers released nonpublic SEC information to a Federal Bureau of Investigation agent and a short seller who were convicted of securities fraud and conspiracy in 2005, an SEC watchdog’s report said Tuesday. One SEC officer on several occasions talked with the FBI special agent about the progress of agency probes of companies, Inspector General David Kotz said in his semi
“A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water-and-sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market.
The call came less than two hours before bids were due for contracts to manage $90 million raised with the sale of West Virginia bonds. On one end of the line was Steven Goldberg, a trader with Financial Security Assurance Holdings Ltd. On the other was Zevi Wolmark, of advisory firm CDR Financial Products Inc. Goldberg arranged to pay a kickback to CDR to land the deal, according to government records filed in connection with a U.S. Justice Department indictment of CDR and Wolmark.
West Virginia was just one stop in a nationwide conspiracy in which financial advisers to municipalities colluded with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Wachovia Corp. and 11 other banks.
“Gov. Bobby Jindal and leaders from several coastal parishes are pushing a $350 million barrier island repair plan as a way to protect Louisiana’s coast from the Gulf of Mexico oil spill and reduce the ultimate cleanup and its costs.
Sand dredged from the gulf’s floor would be built up in 86 miles of the gaps between islands, returning land eaten away by decades of storms and slower erosion.
Jindal said Monday that the project could start within days after the Army Corps of Engineers approves it. He is asking for quick approval, and says he has been told that a decision could come in days.
Jindal says the price tag is much less than it would cost to try to remove oil from marshlands.
(Note 1: Earlier, I posted the Obama bisexual story that claims that Obama’s history suggests someone who could easily be targeted for blackmail or other forms of arm-twisting. BP has been one of Obama’s biggest contributors, giving more to him than to any other candidate in the last twenty years).
“It shouldn’t surprise because no one gets the top job or any government position of power unless they’re safe, yet, naively, most people thought Obama was different. Many still do.
Meat claimed as invention by Monsanto
Wednesday, 28 April 2010 11:22
Meat claimed as invention by multinational company of Monsanto
No Patents on Seeds, Press release, 27 April 2010
http://www.no-patents-on-seeds.org/index.php?option=com_content&task=blogcategory&id=3&Itemid=28
*Stop patenting the food chain!
Multinational seed corporations are following a consequent strategy to gain control over basic resources for food production. As recent research shows not only genetically engineered plants, but more and more the conventional breeding of plants gets into the focus of patent monopolies: International patent applications in this sector are skyrocking, having doubled since 2007 till end of 2009.
“The threat of legal action from mining giant Barrick Gold has forced Vancouver-based Talonbooks to postpone publication of a book about the Canadian mining industry.
Publisher Karl Siegler calls it a clear case of “libel chill” by one of Canada’s largest mining companies.
The book, Imperial Canada Inc.: Legal Haven of Choice for the World’s Mining Industries, was to be published in spring 2010, but in February, the publisher and everyone else involved with the book got a threatening letter from Barrick lawyers.
WASHINGTON (CNN) –For the second time in a week, U.S. troops have discovered what appears to be a cache of gold bars hidden in a truck, which could be worth just less than a quarter of a billion dollars, according to a Pentagon official.
A bill sponsored by Ron Paul and Alan Grayson to thoroughly audit the Fed, passed the House. However in a brazen move that ought to offend the sensibilities of every citizen, the Fed is lobbying Senate members to water down the bill so that it is meaningless.
The report I’ve posted below illustrates why most regulatory efforts are completely counterproductive.
By the time enough bureaucrats are convinced there’s a problem, by the time enough of the public has been educated…or miseducated about it..so there’s enough public pressure to call for hearings, by the time the SEC and the DOJ have been able to gather enough evidence to cobble together charges, the swindles move onto some other part of the system, the crooks cover over their tracks, reinvent themselves, put old wine in new bottles and new wine in old, and, in general, outpace the local flatfoots about 100-1, so that they’re nearly always playing catch-up and dissecting history, rather than actually safeguarding the public from the current perils of the market.
Goldman Sachs is the outrage du jour. But much of the really bad stuff Goldman’s been involved in over several decades has nothing to do with the technicality on which it’s being grilled now, a deal that’s no different from hundreds done on Wall Street by every other bank. Meanwhile, what about the dirty laundry of the hedge-funds, of private equity, of sovereign wealth funds - to take just the private sector? And what of the government’s own culpability in financial wrong-doing? And worse yet, its blunders in financial “right-doing”? Don’t count on the SEC to look at all that.
That’s the intrinsic problem of a statist solution…it’s always a day late and a dollar short.
Thus the LA Times reports on where the action is in the financial world, as evidenced in the glee of some participants at the Milken Institute’s Global Conference [that’s Michael Milken, former convicted junk bond financier turned philanthropist and alleged master mind of global market manipulation}:
“Unemployment is high and the housing market remains weak. But in Beverly Hills on Tuesday, private equity players could hardly be more upbeat.
A panel of private equity fund managers at the Milken Institute’s annual Global Conference celebrated the comeback of highly leveraged deals – which had ground almost to a halt during the financial crisis.
“What a difference a year makes,” enthused Leon Black, head of Apollo Management in New York.
Black and the other buyout honchos attributed the return of debt-financed acquisitions to the recovery in the credit markets and the overall economy.
“The high-yield market is probably better today than it ever has been,” said Scott Sperling, co-president of Thomas H. Lee Partners in Boston, referring to the junk bonds that finance many private equity transactions.
A new problem faces private equity investors now: The prices of target companies have shot up faster than fund managers have been able to scoop up bargains.
“A lot of the low-hanging fruit, frankly, is gone,” Black said. “The snapback has been unbelievably dramatic.”
Not surprisingly, the managers bemoaned what Black termed the “populist wave” helping to fuel the Obama administration’s effort to boost oversight of the financial industry.
“You’re seeing some wacky regulation, which makes running our business a lot more difficult,” said Ted Virtue, chief executive of MidOcean Partners, which buys midsize companies. Still, the private equity business has largely escaped the scrutiny aimed at other areas of Wall Street. “I’m glad I’m not Goldman Sachs today,” Black said with a wide smile.”
In sum, then, the primary development of republicanism in America, for the most part under direction of Alexander Hamilton, effectively safeguarded the monopolist, the capitalist, and the speculator. Its institutions embraced the interests of these three groups and opened the way for their harmonious progress in association. The only interest which it left open to free exploitation was that of the producer. Except insofar as the producer might incidentally and partially bear the character of monopolist, capitalist, and speculator, his interest was unconsidered.
“Larry Summers, dear reader, is part of the problem. There is always an undeniable connection between banking, the elite world of ivory tower Ivy League academia, the government and Wall Street. Summers, who was president of Harvard University until 2006, is former Treasury Secretary of the United States under Bill Clinton, where he worked with now regulators Gary Gensler, Timothy Geithner and Robert Rubin. The last year at Harvard Summers got a $1,000,000 interest only mortgage from Harvard, on top of a $580 thousand salary, which included $30 thousand for benefits and $143 thousand in expense reimbursements–whatever those are…over $11K a month. While at Harvard, he oversaw their endowment, recommending interest rate swap derivatives. Pushed endowment money into a toxic hedge fund Old Lane Partners from Rubin’s Citigroup…Harvard ultimately lost $9.9 billion from its endowment, and at Summers urging, Harvard invested its cash in its exotic investments…losing another $1.8 billion.
“Massachusetts officials on Wednesday announced plans to move millions of dollars in state investments out of some of the nation’s biggest banks to protest credit card interest rates.
State Treasurer Timothy Cahill said the state has removed Bank of America, Citi and Wells Fargo from a list of institutions approved for new state investments. Massachusetts, which is the only state to make such a move, is also beginning to divest $243 million in funds held at those banks, though the process could take up to six months.
“We want to bring some fairness into the issue,” said Cahill, who is running for governor. “I don’t think what we’re asking is . . . out of line.”
Next time there’s a natural disaster and you think the government should “do its share,” “help out” or be compassionate, remember this:
“The United Nations has quietly upped this year’s peacekeeping budget for earthquake-shattered Haiti to $732.4 million, with two-thirds of that amount going for the salary, perks and upkeep of its own personnel, not residents of the devastated island.
on an expanded force of some 12,675 soldiers and police, plus some 479 international staffers, 669 international contract personnel, and 1,300 local workers, just for the 12 months ending June 30, 2010.
Some $495.8 million goes for salaries, benefits, hazard pay, mandatory R&R allowances and upkeep for the peacekeepers and their international staff support. Only about $33.9 million, or 4.6 percent, of that salary total is going to what the U.N. calls “national staff” attached to the peacekeeping effort.”
“When they were first introduced during the early days of the New Deal, farm subsidies were intended to stabilize prices in order to offset the extraordinary low prices brought on by over-production and by the Great Depression; to keep farmers on their farms and in their homes.
Today, it would be fair to say that farm subsidies, like Wall Street bailouts, flow to those who need them the least.
In Thieves in High Places, Jim Hightower provides the classic example — billionaire stockbroker Charles R. Schwab; the proud owner of Casa de Patos, “1,500 acres of picturesque wetlands in Northern California.” Schwab grows rice on the land, not for harvesting purposes but because the rice attracts ducks. Schwab is one of those rich folks who likes to invite friends and clients to go duck hunting. (Careful you don’t invite Dick Cheney, Mr. Schwab.)
So Schwab has no intent to harvest the rice, but that doesn’t prevent this man with an estimated $4.7 billion net worth from collecting $500,000/year in federal farm subsidies because he does not market the rice.
Hightower laments, “Sadly, it’s legal, and it’s a fine upstanding example of what George [W. Bush] and his base like to call ‘entrepreneurship.’”
Update: Antiwar has a good piece about Dr. Lani Kass, Senior Special Assistant to the Chief of Staff to the US Air Force General Norton A. Schwartz, who reached the rank of Major in the Israeli Defense Force (IDF) before rising to her present highly sensitive position at the Pentagon. Dr. Kass is also rumored to be an unofficial adviser to Admiral Mike Mullen, Chair of the Joint Chiefs of Staff, on Middle East Policy.
“There are indications that Dr. Kass is a major player in shaping US security policy. She has been described as a “key participant” in the development of the national strategy for combating terrorism, as well as the national military strategic plan for the Global War on Terrorism. In September 2007, The Times of London reported that she was a leading participant in “Project CHECKMATE, a “highly confidential strategic planning group tasked with ‘fighting the next war’ as tensions rise with Iran” that was “quietly established” by the US Air Force in June 2007 as a “successor to the group that planned the 1991 Gulf War’s air campaign.”
Also per The Times, CHECKMATE “consists of 20-30 top air force officers and defense and cyberspace experts with ready access to the White House, the CIA and other intelligence agencies.” Its director Brigadier-General Lawrence A. Stutzriem and Kass reported directly to General Michael Moseley, at the time chief of staff of the Air Force. The Times cited Defense sources saying, “detailed contingency planning for a possible attack on Iran has been carried out for more than two years.” Regarding Iran operations, Kass was quoted as saying “We can defeat Iran, but are Americans willing to pay the price?”
“Leaving aside the legal issues involved, one does wonder at America’s insistence that Iran remain nuke-free. Back in the 1950s, America participated in a regime change in Iran and there is considerable evidence that America might have destabilized Iran again in the late 1970s. And despite mistranslations, Iran has never directly threatened Israel with nuclear weapons – even if it had them. Israel on the other hand is said to have up to 400 nuclear missiles or more, though Israel has never confirmed their existence.
States, in fact, usually do not commit suicide. The idea that a nuclear Iran would suddenly start lobbing nukes at Israel strikes us as preposterous. Even if Israel did not strike back, the US has enough firepower to turn all of Iran into molten slag. The regime would not survive the first missile. But none of this seems to matter. The US is the de facto policeman of the new global “Power Elite” order. It is harrying nations around the world into falling in line with the US position that so long as there is any hint of a possibility that Iran is pursuing nuclear weapons, Iran ought to be severely boycotted, its economy squeezed and its businesses barred.
It is a serious situation. Boycotts are not inevitably a prelude to war, but they are often destabilizing and can well be a cynical prelude to action. In this case, we believe that certain US leaders seem to want to ratchet up the pressure on Iran to a point that is positively dangerous. Why would the US put world peace at risk over an atomic program that has not yet been proven to exist?”
Why?
Here is one answer: “The Zionist Power Configuration” (James Petras). (Note: The tone of this is shriller than necessary, but because it is a systematic and superbly documented critique that I can’t really find any where else, and because of Lieberman’s new, extremely dangerous call for war in Iran at a time of maximum global fragility (and with the very suspicious downing of the Polish plane in the background), I am going to post it anyway.
And here is more on the IL:
PY TRADE: How Israel’s Lobby Undermines America’s Economy by Grant F. Smith
Foreword by Michael Scheuer, former chief, CIA Bin Laden unit Large Cover Image
Buy now at:
Praise for Spy Trade:
“This terrific historical expose ought to be required background reading for those FBI agents assigned to investigate foreign espionage and public corruption matters. For many reasons, such cases are amongst the most challenging to investigate and prosecute, but are made even harder when undue political pressures enter into the picture. FBI officials responsible for setting investigative priorities and allocating resources would also do well therefore to read Spy Trade so they are aware of the historical linkage between Israel’s ‘Uzi diplomacy’ arms dealing, the Iran-Contra scandal, and the Jonathan Pollard spy incident with AIPAC’s nefarious ‘lobbying’ activities.” Coleen Rowley, former FBI agent and 2002 Time Magazine “Person of the Year.”
“Grant F. Smith’s excellent, deeply disturbing book..is a welcome addition to a growing scholarly literature.” Michael Scheuer, former senior CIA analyst and author of “Imperial Hubris”
“Like political parties, lobbies are groups of citizens with shared interests, an important part of a functioning democracy. When they have enormous power, however, and especially if their activities remain almost completely hidden, lobbies can be dangerous.
Meticulously detailed in this riveting addition to his earlier exposes, Grant Smith reveals yet another facet of the extent to which the pro-Israel Lobby is beyond dangerous, and has become a serious threat to a broad range of American ideals, objectives and interests abroad, as well as here at home. This book contains many highly disturbing, documented revelations. Read it.” Ambassador Edward L. Peck, former Chief of Mission in Iraq and Former Deputy Director, Cabinet Task Force on Terrorism, Reagan White House
“This book presents formidable and dangerous new evidence of spying by Israel and the corrosive long term influence of its lobby on US governance.” Paul Findley, member of Congress from 1961 to 1983 and author of three books on the US-Israeli relationship, including the Washington Post bestseller They Dare to Speak Out: People and Institutions Confront Israel’s Lobby
“Grant F. Smith is without peer as an archival scholar of the history of the Zionist power configuration operating in tandem inside and outside of the US government. His meticulous research on the long-term operations of AIPAC in shaping US Middle East policy provides the best contemporary framework for understanding our involvement in Middle East wars. He shows how American foreign policy in the Middle East follows Israel’s agenda and documents the enormous cost to our Treasury and economy as well as the loss of American lives. This is a book that should be read by all citizens who are concerned about the aggressive manipulation of our media and political institutions to enhance Israel’s power and further its privileged position in the Middle East.”James Petras, Bartle Professor (Emeritus) of Sociology at Binghamton University, New York
About the Book
Israel and its American lobby have committed audacious but generally unknown crimes against the United States. Government secrecy across the CIA, FBI, Department of Justice and Pentagon long kept files about Israeli espionage, weapons smuggling and covert operations on American soil classified…until now.
Spy Trade begins on the trail of a vast smuggler network funneling stolen and illegally purchased surplus WWII arms to Jewish fighters in Palestine. When the FBI threatened to crack down–a clandestine summit meeting yielded minor convictions for small time operators–but not the financial masterminds behind the scheme. This germ of immunity soon flowered into a full scale assault on American industry, the electoral system, national defense secrets and rule of law itself.
Spy Trade probes Israel lobby smuggling operations diverting uranium from the US to Israel’s Dimona nuclear weapons facility. The US Department Justice battled mightily to regulate two key enablers–the Jewish Agency and American Zionist Council–as Israeli foreign agents in the 1960s. But when the effort failed it generated a massive counterstrike.
Israel lobby campaign finance violations unleashed a network of coordinated stealth political action committees that intimidated American politicians and made a “pro-Israel” outlook and voting record requirements for staying in government. A new legal battle to regulate the American Israel Public Affairs Committee (AIPAC) as a political action committee–this time launched by concerned citizens–began two decades ago but has not yet been resolved.
Spy Trade alsoreveals the long term impact of a newly declassified “third scandal” that began in the 1980s. In the midst of both the Iran-Contra affair and Jonathan Pollard espionage incident AIPAC and the Israeli embassy conducted a spectacular clandestine operation against American industries and workers. It has so far cost the US economy $71 billion and a hundred thousand jobs each year by shutting down or diverting US exports. Trade privileges obtained by Israel under the treaty not only permit financing illegal settlement construction with proceeds from diamonds sold in the US. The US pharmaceutical industry faces an unrelenting onslaught against its capacity to innovate and protect its intellectual property.
Spy Trade is much more than a groundbreaking dissection of the tactics Israel and its American lobby repeatedly use to evade justice. The book also provides stunningly simple strategies for ending criminal immunity and subversion of law enforcement that may someday restore American governance.
“Experts have analysed the pensions of a number of former directors of British banks, many of which were only saved from collapse by state bailouts. The biggest beneficiary is former Royal Bank of Scotland director Larry Fish, who has a pension pot of £18m, paying out £1.5m a year. Unlike the former RBS chief executive Sir Fred Goodwin, he has managed to maintain a low profile up to now, as he used to run the bank’s American operations.
Other bankers with pension pots of more than £1m include: Richard Banks, Richard Pym and Chris Rhodes (Alliance & Leicester); Steve Crawshaw and Chris Rodrigues (Bradford & Bingley); Peter Cummings, Colin Matthew and Phil Hodkinson (HBOS); David Baker, Robert Bennett, Keith Currie, David Jones and Andy Kuipers (Northern Rock); and Johnny Cameron and Mark Fisher (RBS).
The analysis also established that the true value of Sir Fred Goodwin’s pension pot could be, in fact, almost double the previously stated figure of £16m. According to pensions expert John Ralfe: “The official numbers that Royal Bank of Scotland has come out with is that his total pension pot from the age of 51 to the expected death is about £16.9m. I think that is a gross understatement. If I wanted to go along to a third-party pension provider and get the sort of pension that Fred Goodwin is on – £700,000 and that goes up in line with inflation, of course, each year – I would have to pay something in the order of £28m.”
The contrast with the pensions given to rank-and-file banking staff could not be greater. Dennis Grainger, who worked at Northern Rock for a decade, is entitled to only £700 a year. “I’m so disgusted with this I’ve turned it down,” said Mr Grainger.
Vince Cable, the Liberal Democrat Treasury spokesman, has attacked the scale of the rewards: “What makes people really, really angry is that these people were exceptionally well paid, got enormous pension pots and other payments, despite the fact that they have failed and they have failed their shareholders, failed their employees and failed the taxpayer, and they are walking away with their millions.”
The large payments are not limited to pensions. Bank bosses have seen their average salaries rise from £800,000 in 2006 to more than £1m in 2008 – 20 per cent more than the average pay packet of chief executives in other sectors. They now earn £255,000 a year more than their FTSE-100 counterparts. Fees paid to non-executive directors of banks have also risen. In the case of the RBS, non-executive directors have seen their fees almost treble in less than a decade, from £25,000 a year in 2000 to £73,000 a year in 2008.
Mr Cable has denounced bankers’ pay and perks as “the kind of things you would associate with absolute monarchies in the days of the Bourbons in France”.
Sir Fred Goodwin
Even after cashing in £2.7m of his pension, he gets £550,000
Sir James Crosby
Will start reaping rewards of £10.4m pension pot in 2011 £572,000
Lawrence Fish
£18m pension fund yields over a million every year £1.5m
Adam Applegarth
In 2022 he will be able to claim his full yearly pension £305,000
Andy Hornby
The former HBOS chief can take his pension at 50 £240,000
Michael Fairey
Opted to take his entire £7m pension pot as a lump sum £280,000″
John Paulson - more crooked than clever, says The Big Money:
“What emerges from the SEC’s charges against Goldman Sachs (which, it should be noted, the investment bank is strenuously denying) isn’t a story of Paulson seeing a crisis coming when others are still happily buying up housing derivatives. No, it’s a story of reluctant buyers manipulated into buying more collateralized debt obligations when it was already clear that the market was falling apart.”
“EJ: Who wins the political battle shaping up here between the PIIGS and their creditors? Within the structure of the euro?
MH: I guess whoever has the most guns politically. The Greeks are out on the streets. The French are out on the streets. They’re not like Americans. They’re really protesting and the class war is back in business over there. Same thing in Ireland.
EJ: My French friends will tell me they’re barbarians over there. We’re very civilized here in the United States.
MH: That’s our problem, as Freud said in “Civilization and its Discontents.”
EJ: I remember reading that book in college. He explained the conflict between the demands of society for individuals to stifle the animalistic behavioral foundations of human nature. Is there a way to diffuse the conflict? A muddle-through option? The IMF has been in and out of the Greek rescue.
Debtor versus creditor nations split the EU
MH: The IMF cannot be part of the solution. It’s part of the problem. The EU basically is part of the problem because it’s pro-financial. So the whole way in which the European Union is structured, basically in a centralized way to be run by the financial lobbyists, obviously isn’t working. The EU isn’t really like the United States. It doesn’t really have it’s own parliament and systematic taxes. The Germans are saying today that in the old days, a century ago, if a problem like this came up in, say, Latin America, the United States would send in the marines. They’d occupy the custom’s houses and as these governments made most of their money on charging customs on imports and exports the marines would collect it and pay the creditors.
But now what are the creditors going to do today? Are, let’s say, the Germans going to take over in Greece? Who will act as the equivalent of the Internal Revenue Service to collect the money? The Germans would have to promote not a military dictatorship as the colonel powers did in the old days but a popular government that would tax the rich and the Germans aren’t going to do that. The European Union, the creditors, because they support the right wing not the left wing, are preventing these governments from collecting taxes progressively to balance the budget and pay the debts. That’s the problem: it’s a right-wing versus left-wing problem. Unfortunately, there isn’t really a left wing in Europe to make this case very well. The social democrats have more or less abandoned what used to be an economic policy at the outset. They are now concerned more with political and social issues than economic issues. So there isn’t really a party in Europe that is taking the side of progressive economic policies. They’ve left economics and finance, and debt and credit policy, to the right wing to discuss among each other rather than making it a left-wing topic like it used to be a hundred years ago.
EJ: Isn’t that something of a global phenomenon?
MH: Yes.
EJ: I don’t see it as being terribly different here in the US.
MH: Or in Australia. The Labor Parties all over the world. The most right-wing parties that you can see are the labor parties of Australia and New Zealand where they were leading the privatization sell-offs and leading the tax shift favoring the financial sector. And they didn’t even realize it! They’ve somehow “decoupled” financial analysis from the social analysis that characterizes social democratic and labor parties from their outset a hundred years ago.”
My Comment:
Hudson is always interesting to read, as long as you keep in mind his basic Marxist orientation. So he gets the details right, and then he goes on about the old demon “right-wing” in rhetoric that doesn’t make sense to me, and that even his own writing betrays.
“So Old Europe is quite culpable for having promoted a kind of neo-liberalism that was so right-wing as never to have been able to get a foothold at all either in Western Europe or in the United States. In Latvia there is a flat tax on labor of over 50% and less than a 1% tax on property.”
But right-wingers are the ones arguing the hardest to abolish taxes, especially in this country….
So, with the acknowledgment that I’m an alert student of economics who’s been reading/researching the economic crisis for a few years, but whose main training is in history and politics, let me note the puzzling discrepancies I find in the writing of a man whose knowledge and industry experience are said to be impeccable by even people who don’t agree with him:
1. Why does MH blame “right wingers,” when it was Austrians and right-wingers who were vehemently opposed to the bail-out and to TARP that saddled the country with the banks’ debts? Since when are social-democrats right-wingers?
2. Monetarism and monetary intervention are uniformly advocated by all economists, from the so-called left to the so-called right. Indeed, it’s only the extreme right (to the right of the statist Chicago school) that criticizes all monetary intervention.
3. Why does Hudson argue against deflation? Deflation is the one thing that will ultimately put the economy back on track. All those overpriced houses would fall in price to within reach of the average citizen. Deflation might reduce wages but it will save pensioners and support savers (who have taken the brunt of the damage done by the boom).
4. A default by Greece would have helped the Euro, ultimately.
5. Why does Hudson think that inflating away a country’s debt is good for the working man or for pensioners or for small business? Inflation will whittle away at the currency, at savings, and at real income. None of which is good for ordinary people.
6. Hudson is right that Social Security and Medicare in the US are not entitlements, since people have all contributed to them. One solution to funding them is to dismantle the war machine. Convert all bases to peaceful uses. That requires no extra funding. Why is it that Hudson doesn’t raise that as an option?
7. Hudson claims that Latvian taxes are of a kind no Western nation would levy (50%) on labor. Really? Adding up all income taxes and sales taxes, taxes in the northern European countries are surely that high, and taxes in the US and UK are well on their way there.
8. Despite talking about “social culture” Hudson says nothing about whether the Eastern European countries have the same kind of business and social culture that have made the northern countries creditor countries. What are the rates of savings, of corruption, of business creation? What are the laws regarding property rights? What are the incentives, or lack thereof, for business?
“SAN FRANCISCO (MarketWatch) — The Securities and Exchange Commission on Friday charged Goldman Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product related to subprime mortgages.
The SEC alleged in a lawsuit that Goldman /quotes/comstock/13*!gs/quotes/nls/gs (GS158.38, -25.89, -14.05%) structured and marketed a collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities. However, it failed to disclose the role that a major hedge fund, Paulson & Co., played in the portfolio selection process as well as the fact that the hedge fund had taken a short position against the CDO.”
This is likely to start a sell-off in the financial sector as a whole (down 3.1%) and possibly the much waited next leg down of the great correction that began in 2007-08.
Michael Roston points out the obvious. The amount in question in the Abacus deal is $15 million bucks, which is chump change.
Point two. No one’s saying anything about John Paulson, who made $1 billion out of it.
[Or, to take another instance, what about the Greek government, which is also getting bailed out....by tax-payers of another country? No culpability for the governments who get into these kinds of deals?]
You’ll also notice, as I blogged earlier, that George Soros, another speculator, has also called for the IB’s to be broken up (using the same argument, “too big to fail means too big to exist” - something also pushed by David Einhorn and the left-liberals). Now, I can see the sense in the “too big to fail, too big to exist” mantra, especially, if it had been used against the banks before they helped themselves to tax-payer money. But I wonder why it’s being repeated now, after the fact….and not then..
I didn’t hear these same critics of size pipe up at that crucial time.
“Wall Street’s most powerful firm is being drawn into the government’s sprawling insider-trading investigation.
Prosecutors are examining whether a Goldman Sachs Group Inc. board member gave inside information about the Wall Street firm to Galleon hedge-fund founder Raj Rajaratnam during the height of the financial crisis, people close to the situation told The Wall Street Journal.”
1) A neutron star with an intense magnetic field, capable of emitting toxic radiation across galaxies 2) A hedge fund, the single market player most responsible for the severity of the 2008 financial crisis, through the toxic instruments it created
Thus it is not surprising that the U.S. Government, following the lead of the CIA, has over the years become a protector of drug traffickers against criminal prosecution in this country. For example both the FBI and CIA intervened in 1981 to block the indictment (on stolen car charges) of the drug-trafficking Mexican intelligence czar Miguel Nazar Haro, claiming that Nazar was “an essential repeat essential contact for CIA station in Mexico City,” on matters of “terrorism, intelligence, and counterintelligence.” When Associate Attorney General Lowell Jensen refused to proceed with Nazar’s indictment, the San Diego U.S. Attorney, William Kennedy, publicly exposed his intervention. For this he was promptly fired.
“In forwarding Starr’s email to the SEC, former Lehman General Auditor Beth Rudofker wrote: “I phoned you earlier to review and pass on some recent rumor activity and information that is concerning to us.”
In June, Rudofker sent another email to lawyers at the SEC, pointing out additional “rumors” about Lehman that she said “continue to be destructive.” In her long email to the SEC, she said: “We have been able to prevent 3 stories containing these specific rumors that were set to run.”
Also included in the documents is a back-and-forth email exchange between Einhorn and Callan, in which Callan accused him of being “very disingenuous.” Callan said she would not have talked to Einhorn if she knew he was going to make a speech criticizing the firm’s finances.
“I can only feel that you set me up and you will now cherry pick what you like out of the conversation to your thesis,” she wrote in an May 19, 2008 email.
Einhorn defended himself in a lengthy response, saying that Callan knew Greenlight was “short” the stock when she reached out to talk to him.
“You had no reason to expect that our discussion was confidential in any way,” Einhorn wrote in response. “In fact, you knew that I do not want to be restricted in trading the stock and I did not request any information that you would not provide to any other investor who asked.”
A few days later, Einhorn gave another speech blasting the email exchange.
A spokesman for Einhorn declined to comment on Wednesday evening.
For his part, Starr now says, “obviously I was wrong” about Lehman. But he isn’t backing down on his criticism of Einhorn.
“I still stand by those words,” said Starr, who noted that his fund has $50 million under management. “I think that manipulating the market and running a high publicity business is just not appropriate behavior and disruptive to free and open markets.”
My Comment:
Goldstein is the excellent Reuters reporter whose story on Steven Cohen was reportedly spiked…
Sir James Michael Goldsmith, Anglo-French financier and corporate raider of the 1980s, is most infamous for taking over Goodyear Tires and restructuring it, thereby putting its many employees out of work.
In this deeply prophetic interview with Charlie Rose in 1994 he discusses his book about globalization, The Trap, and displays a more humane side of his complex intelligence.
In the earlier part of the interview (not shown here), Goldsmith gets into a heated debate with Clinton economic honcho Laura Tyson over the benefits of NAFTA and GATT in which Tyson comes off as both naive and uninformed.
In another part,Goldsmith calls Indian physicist and environmental activist Vandana Shiva “remarkable” and asks why it is that global “free” trade, supposedly so beneficial to developing countries, was protested widely and vigorously by huge numbers of people in India.
Take away points from the interview:
*This (globalization) is the establishment against the rest of society
*I am for big business until it devours society
*Big business loves total access to unlimited give-away labor
*In every developing nation you have a handful of people who control everything, the oligarchs
*This (globalization) is the poor in rich countries subsidizing the rich in the poor countries (Lila: I’d add that the poor in poor countries are also subsidizing the rich in rich countries)
*Free trade within homogeneous regions is to be preferred to global trade
(Lila: This coincides with something I’ve advocated for a while, on the principle of subsidiarity)
*The European parliament is a force for pseudo-democratic institutions
*It’s already fixed by the two main parties, the Christian Democrats and the Socialists
*The people have a right to vote on the single most important economic decision of their life times
*Here in the USA we’ve had no debate on it (GATT) while we’ve had a huge debate about NAFTA which was a pimple
*GATT is going through because business wants it
*It’s a fix here (the US), as it is in Europe
*We’ve allowed instruments that are supposed to serve us to become our masters
*GATT is an example of how an economic doctrine is going to destabilize our society
*Nuclear is another example. Here in Europe, we’ve not been allowed to discuss this disastrous form of energy, disastrous in terms both of economics and in terms of security
*Corporate agriculture is a third example of how we are destroying our societies
*The ruling machinery of government power in Europe is imposing this (GATT) without a debate
Mark Thatcher, son of the former UK PM, seems to have been dogged with accusations of financial impropriety. I bring him up, because of a comment on this blog about his direct involvement in an international conspiracy to cover up the manipulation of precious metals that was apparently outed in 2002 in the UK, but was covered up. In researching the comment, I began with some background on Mark Thatcher.
“But hit controversy in 1984 when the Observer alleged that he benefited from his mother’s position when a large construction deal in Oman was awarded to a building firm, Cementation, with which he was involved, after Mrs Thatcher visited the tiny Gulf state. The accusations were never proven.
Further controversy dogged him through his friendship with the Middle East businessman Wafic Said - a quiet-spoken Syrian with close links with Saudi royalty.
Among other business ventures in the 1980s, he was involved in several large-scale arms deals, most notably a £20bn contract between British Aerospace and Saudi Arabia.
Although rumours of impropriety have dogged his business career, he largely disappeared off Fleet Street’s radar after moving to the US.
But it is recorded that his wealth grew to the point where he spent periods as a tax exile in Switzerland.
In the 1990s he helped secure the multimillion pound contract for his mother’s Downing Street memoirs, but after the failure of a security alarm business in the US and a prosecution for tax evasion, Mark, his wife and their two children moved again - this time to South Africa.
Three years after the move to Cape Town, in 1998, he was investigated by South African police over a money-lending business to police officers. He counter-claimed that officers working for him as agents had defrauded him and the investigation was eventually dropped.
He returned to the UK last July for the funeral of his father, Sir Denis, a former oil businessman, who died aged 88. He inherited his father’s hereditary baronetcy to become Sir Mark.
Sir Mark, who was known as “Thickie Mork” among other nicknames at Harrow and who has been criticised for his lack of charm, was once described by the Financial Times as “a sort of Harrovian Arthur Daley with a famous Mum”.
A devoted Lady Thatcher, however, has always had faith in him. “Mark could sell snow to the Eskimos, and sand to the Arabs,” she is reported to have said.
His notoriety was not welcomed by Sir Bernard Ingham, Lady Thatcher’s former press secretary.
Asked by Sir Mark how he could best help his mother win the 1987 general election, Ingham reportedly replied: “Leave the country.”
“It’s something like out of a James Bond movie. What are the odds that my testimony gets blotted out from live coverage and then our whistleblower and wife get hit by a car the next day? … The gold scandal story is larger than life to begin with. Now throw this spooky stuff on top of it. Veteran Cafe (Le Metropole Cafe, Murphy’s website) members will recall that in the early part of this century what happened to me during a six week period …
My car was stolen and then found on a nearby highway one day after the insurance company paid me off. There was no damage to the car, money left in the console, and a cashmere sweater in the back seat.
My web site was hacked and somebody sent out a very goofy email supposedly from me, but it was not me.
Coming out of a restaurant/night spot less than two blocks from where I live, somebody jumped out from behind a wall and sucker-punched me with brass knuckles. I was out cold and thought my jaw was broken.
Nothing like this has happened before or since.
Daily Bell: Do you think, this time, that the CFTC must take all this seriously.
Bill Murphy: Outside of Bart, it appears none of them want to go there. GATA is like their worst nightmare because they are like everyone else … kowtowing to the rich and powerful. However, a firestorm is growing about what GATA has to say, partially ignited by the Andrew Maguire revelations. I suspect we are finally going to receive some mainstream press in the months ahead, which will be like shining a light on Dracula.
Daily Bell: Why hasn’t it already?
Bill Murphy: The relationship between a government agency like the SEC and the CFTC is insidious. Nobody wants to rock the boat. Heck a number of these people at these agencies end up working on Wall Street, or interact business-wise in some other manner. The Chairman of the CFTC is a Goldman Sachs alumni. That about says it all.”
Mark Mitchell comments on the CFTC hearings and the manipulation of trading of gold and silver derivatives (read IOUs):
“Maguire added: “What’s going to happen, if you’re an Asian trader, or a non-Western trader, who has no loyalty, or doesn’t care about homeland security or anything else, who says, now wait a minute, if I can establish in my mind that there is 100 ounces of paper gold, paper silver for example, for each ounce of real silver, than I have a naked short situation here that I can squeeze and they can go on the spot market which is basically a foreign exchange transaction, short dollar, long silver to any amount they want – billions, trillions — whatever they want, and they can take this market, squeeze this market, and blow it up…”
In other words, the problem isn’t just that criminal naked short sellers manipulate the metals market downwards. It is that they have created a condition where a foreign entity can merely demand delivery of real metal to induce a massive “squeeze” that sends the price of metals skyrocketing, putting huge downward pressure on the dollar. Meanwhile, says Maguire, with prices rising, “for 100 customers who show up there is only one guy who is going to get his gold or silver and there’s 99 who will be disappointed, so without any new money coming into the market, just asking for that gold and silver will create a default.”
This would be a point, except…except..
1. This kind of fraudulent activity in the markets in the West is going to be seen by most foreigners as a direct act of financial aggression against them, not just domestic market participants. You can’t admit that your entire market system is rigged in favor of US and European banks, and then expect that the rest of the world is just going to stand there and not retaliate in some way…with justification.
Turnabout is fair play. Defense is not offense.
2. I doubt that Chinese, Saudis or any other foreigners are interested in squeezing the dollar, since they are the primary holders of dollars. In international markets, the dollar is still the reserve currency and most people save in it. Nor is the American middle class, loyal or disloyal, going to want a weaker dollar. They earn their money in dollars. The only people likely to attack the dollar are speculators, who will do it because they see a gain to be made from it. And the people most likely to do it successfully are the same people who are involved in manipulating it in the first place...the corrupt bankers and financiers who’ve got the most to gain in this and the least to lose.
Nothing that Paulson, Greenspan, Geithner, Summers, or Bernanke have been doing adds up to anything like a “strong dollar” policy. They’ve done everything but shout “bail” to dollar holders.
A January 29, 2002 piece in the Los Angeles Times suggests that 25% of the defense budget is “missing in action.” Have you ever wondered about the financing of blackops (here and abroad), bribery of public officials (here and abroad), and arms sales without Congressional approval?
“On Sept. 10, Secretary of Defense Donald Rumsfeld declared war. Not on foreign terrorists, “the adversary’s closer to home. It’s the Pentagon bureaucracy,” he said.
He said money wasted by the military poses a serious threat.
“In fact, it could be said it’s a matter of life and death,” he said.
Rumsfeld promised change but the next day – Sept. 11– the world changed and in the rush to fund the war on terrorism, the war on waste seems to have been forgotten.
Just last week President Bush announced, “my 2003 budget calls for more than $48 billion in new defense spending.”
More money for the Pentagon, CBS News Correspondent Vince Gonzales reports, while its own auditors admit the military cannot account for 25 percent of what it spends.
“According to some estimates we cannot track $2.3 trillion in transactions,” Rumsfeld admitted.
$2.3 trillion — that’s $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.
“We know it’s gone. But we don’t know what they spent it on,” said Jim Minnery, Defense Finance and Accounting Service.
Minnery, a former Marine turned whistle-blower, is risking his job by speaking out for the first time about the millions he noticed were missing from one defense agency’s balance sheets. Minnery tried to follow the money trail, even crisscrossing the country looking for records.
“The director looked at me and said ‘Why do you care about this stuff?’ It took me aback, you know? My supervisor asking me why I care about doing a good job,” said Minnery.
He was reassigned and says officials then covered up the problem by just writing it off.
“They have to cover it up,” he said. “That’s where the corruption comes in. They have to cover up the fact that they can’t do the job.”
The Pentagon’s Inspector General “partially substantiated” several of Minnery’s allegations but could not prove officials tried “to manipulate the financial statements.”
Twenty years ago, Department of Defense Analyst Franklin C. Spinney made headlines exposing what he calls the “accounting games.” He’s still there, and although he does not speak for the Pentagon, he believes the problem has gotten worse.
“Those numbers are pie in the sky. The books are cooked routinely year after year,” he said.
Another critic of Pentagon waste, Retired Vice Admiral Jack Shanahan, commanded the Navy’s 2nd Fleet the first time Donald Rumsfeld served as Defense Secretary, in 1976.
In his opinion, “With good financial oversight we could find $48 billion in loose change in that building, without having to hit the taxpayers.”
Is it permitted to wonder if there wasn’t also deliberate siphoning off of funds for illegitimate purposes…
The hedge fund lobby is stepping up the..er… whining and dining in DC, says, Crain’s:
“With all the political and media focus on healthcare reform over the past few months, the financial industry enjoyed a brief respite from attacks and, as would be expected, spent its time and money wisely.
The hedge fund lobby, called the Managed Funds Association, doubled its spending during the last three months of 2009, according to data recently released by the Federal Election Commission. The MFA strategically sprinkled more than $1 million around Washington in the fourth quarter, compared to just $520,000 spent during the same period in 2008.”
Apparently, the hedgies don’t mind registering. What they’re kicking at are some other things:
1. Treating compensation as regular income (with its higher tax rate) rather than capital gains (with its 15% tax rate)
2. The banning of proprietary trading by banks, until now a lucrative source of income, the so-called Volcker rule.
The part I found really interesting in the Crain’s piece is that industry CEO Richard Baker apparently thinks there is a “growing alignment between hedge funds and millions of Americans.”
Oh yeah.
That would be that trader-activist mystique thing where Loeb, Paulson, and Chanos are really doing it for the little guy…….the money is just a side dish.
Um. Yeah. I get that.
And talking about side dishes, I hear that Rachel Uchitel’s interests are just aligned with Joe Six-pack’s too. She isn’t an extortionist and a gold-digger. Oh no. That’s just what it looks like. She’s a conjugal activist. She trying to get Tiger and all those other rovin’ eyes out there to be better husbands…..
Gold War I - The “London Gold Pool” - 1961 to 1968
By the beginning of the 1960s, the $US 35 = 1 oz. Gold ratio was becoming more and more difficult to sustain. Gold demand was rising and U.S. Gold reserves were falling, both as a result of the ever increasing trade deficits which the U.S. continued to run with the rest of the world. Shortly after President Kennedy was Inaugurated in January 1961, and to combat this situation, newly-appointed Undersecretary of the Treasury Robert Roosa suggested that the U.S. and Europe should pool their Gold resources to prevent the private market price for Gold from exceeding the mandated rate of $US 35 per ounce. Acting on this suggestion, the Central Banks of the U.S., Britain, West Germany, France, Switzerland, Italy, Belgium, the Netherlands, and Luxembourg set up the “London Gold Pool” in early 1961.
The Pool came unstuck when the French, under Charles de Gaulle, reneged and began to send the Dollars earned by exporting to the U.S. back and demanding Gold rather than Treasury debt paper in return. Under the terms of the Bretton Woods Agreement signed in 1944, France was legally entitled to do this. The drain on U.S. Gold became acute, and the London Gold Pool folded in April 1968. But the demand for U.S. Gold did not abate.
By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the “Gold Window”. The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world’s currencies “floated”. By the end of 1974, Gold had soared from $35 to $195 an ounce.
Gold War II - The IMF/U.S. Treasury Gold Auctions - 1975 to 1979
On January 1, 1975, after 42 years, it again became “legal” for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it “burned” large numbers of small individual investors.
But this “pre-emptive strike” against the Gold price did not solve the imbalances inherent in the floating currency regime. As the Gold price began to recover from its August 1976 low, the (US-controlled) IMF along with the Treasury itself, began a series of Gold auctions in an attempt to hold down the price through official means. But the problem of yet another free fall in the international value of the Dollar got in the way. Between January and October of 1978, the Dollar lost fully 25% of its value against a basket of the currencies of its major trading partners. By early 1979, due to this precipitous fall, the demand for Gold was overwhelming the amount that the IMF/Treasury dared supply, and the Gold auctions came to an end.
Gold regained its ($195) December 1974 level by July 1978. It then pressed on to new highs, hitting $250 in February 1979 and $300 in July. Also in July, Paul Volcker was appointed as Fed Chairman by a desperate Jimmy Carter. Gold continued to surge, hitting $400 in October. While this was happening, Mr Volcker was attending a conference in Belgrade. There the assessment was made that the global financial system was on the verge of collapse. When Mr Volcker returned to the U.S. from Belgrade, he took a momentous step. He announced that the Fed was switching its policy from controlling interest rates to controlling the money supply.
This new Fed policy took some time to have effect. In the meantime, Gold soared from $381 on Nov. 1, 1979 to $850 on Jan. 21, 1980. The public, who had been burned in 1975, were late on the scene. The great burst of public Gold buying came in the four weeks between Christmas 1979 and the Jan 21, 1980 high. As in 1975, they were “burned” again.
The Paper Era Begins
In early 1980, Mr Volcker’s new Fed policy began to bite. U.S. interest rates began to skyrocket. As they rose, the Dollar first slowed its descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold was lured back into paper by this huge rise in interest rates - and by the prospect of a higher U.S. Dollar. The threat of financial meltdown was averted, but at a cost. The U.S. Prime rate hit 20% in April 1980 and stayed there (with a brief dive in mid-1980) until the end of 1981. There was a rush out of Gold and back to Dollars.
Once interest rates began to come down, in early/mid 1982, the choice of where to put the Dollars faced investors once more. The initial solution was just as it had been in the 1970s. The Dow took off - rising from 776 to almost 1100 between mid August 1982 and late January 1983. Gold started earlier and took off even harder - rising from $296 in late June 1982 to $510 at the end of January 1983.
That’s where the similarity to the 1970s ended. Gold fell $105 in the last four trading days of February 1983. As it fell, the Dow broke above the 1100 point level for the first time. The long bull market in stocks, and the long stagnation of Gold, had begun…..”
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