|The word is out – Financial Market operators are the lowest of the low. Having worked in the Markets for two odd decades from the early 80’s – I saw it from its infancy here in Australia.
I saw it all, worked in New York and Chicago, spent time in London, moved to and lived in Sydney and ran a $500 million investment portfolio. It was a career with no peer until it all ended because a scumbag named John O’Neill – (current ARU supremo – and head of the State Bank of NSW at the time) – stepped in and with the help of Nick Greiner, the then Premier of NSW, went about and perpetrated a A$75 million NSW Government sanctioned fraud upon 265,000 investors that neither have ever had to account for.
That is my story – but what has been happening in Financial Markets over the last 20 odd years is not just a fraud perpetrated against a global population – it has destroyed the way people live their lives and impacted on everybody on the planet. These mega wealthy operatives have emmense financial ‘clout’ at their disposal – they will do whatever it takes to protect themselves. They’re not afraid to bring down Government’s in the process and use the global financial system as leverage if they need to protect themselves. That was the price Lehman Bros paid to get everybody else off the hook.
I read today a Robert Reich article on the latest Barclays PLC LIBOR (London Interbank Offer Rate) scandal. LIBOR is a settlements exchange rate professional Financial Institutions deal at among themselves. You would have been reading updates on this developing scandal and the Robert Reich story covers the scandal eloquently and it is a must read.
Barclays PLC UK Bank had to pay away almost $500 million in fines and penalties for their part in rigging this LIBOR market. Before I make more comment, I will let you read the Robert Reich story.
[Robert Reich is Chancellor’s Professor of Public Policy, University of California at Berkeley. He has a ‘blog’ off his Berkeley position and his ‘bio’ can be read here.]
The Wall Street Scandal of All Scandals
| Author: Robert Reich | Date: July 7th 2012 | Link to On-Line Story. | Join Reich RSS Feed |
Just when you thought Wall Street couldn’t sink any lower — when its myriad abuses of public trust have already spread a miasma of cynicism over the entire economic system, giving birth to Tea Partiers and Occupiers and all manner of conspiracy theories; when its excesses have already wrought havoc with the lives of millions of Americans, causing taxpayers to shell out billions (of which only a portion has been repaid) even as its top executives are back to making more money than ever; when its vast political power (via campaign contributions) has already eviscerated much of the Dodd-Frank law that was supposed to rein it in, including the so-called “Volcker” Rule that was sold as a milder version of the old Glass-Steagall Act that used to separate investment from commercial banking — yes, just when you thought the Street had hit bottom, an even deeper level of public-be-damned greed and corruption is revealed.
Sit down and hold on to your chair.
What’s the most basic service banks provide? Borrow money and lend it out. You put your savings in a bank to hold in trust, and the bank agrees to pay you interest on it. Or you borrow money from the bank and you agree to pay the bank interest.
How is this interest rate determined? We trust that the banking system is setting today’s rate based on its best guess about the future worth of the money. And we assume that guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for the dough.
But suppose our assumption is wrong. Suppose the bankers are manipulating the interest rate so they can place bets with the money you lend or repay them — bets that will pay off big for them because they have inside information on what the market is really predicting, which they’re not sharing with you.
That would be a mammoth violation of public trust. And it would amount to a rip-off of almost cosmic proportion — trillions of dollars that you and I and other average people would otherwise have received or saved on our lending and borrowing that have been going instead to the bankers. It would make the other abuses of trust we’ve witnessed look like child’s play by comparison.
Sad to say, there’s reason to believe this has been going on, or something very much like it. This is what the emerging scandal over “Libor” (short for “London interbank offered rate”) is all about.
Libor is the benchmark for trillions of dollars of loans worldwide — mortgage loans, small business loans, personal loans. It’s compiled by averaging the rates at which the major banks say they borrow.
So far, the scandal has been limited to Barclay’s, a big London-based bank that just paid $453 million to U.S. and British bank regulators, whose top executives have been forced to resign, and whose traders’ emails give a chilling picture of how easily they got their colleagues to rig interest rates in order to make big bucks. (Robert Diamond, Jr., the former Barclay CEO who was forced to resign, said the emails made him “physically ill” — perhaps because they so patently reveal the corruption.)
But Wall Street has almost surely been involved in the same practice, including the usual suspects — JPMorgan Chase, Citigroup, and Bank of America — because every major bank participates in setting the Libor rate, and Barclay’s couldn’t have rigged it without their witting involvement.
In fact, Barclay’s defense has been that every major bank was fixing Libor in the same way, and for the same reason. And Barclays is “cooperating” (i.e., giving damning evidence about other big banks) with the Justice Department and other regulators in order to avoid steeper penalties or criminal prosecutions, so the fireworks have just begun.
There are really two different Libor scandals. One has to do with a period just before the financial crisis, around 2007, when Barclays and other banks submitted fake Libor rates lower than the banks’ actual borrowing costs in order to disguise how much trouble they were in. This was bad enough. Had the world known then, action might have been taken earlier to diminish the impact of the near financial meltdown of 2008.
But the other scandal is even worse. It involves a more general practice, starting around 2005 and continuing until — who knows? it might still be going on — to rig the Libor in whatever way necessary to assure the banks’ bets on derivatives would be profitable.
This is insider trading on a gigantic scale. It makes the bankers winners and the rest of us — whose money they’ve used for to make their bets — losers and chumps.
What to do about it, other than hope the Justice Department and other regulators impose stiff fines and even criminal penalties, and hold executives responsible?
When it comes to Wall Street and the financial sector in general, most of us suffer outrage fatigue combined with an overwhelming cynicism that nothing will ever be done to stop these abuses because the Street is too powerful. But that fatigue and cynicism are self-fulfilling; nothing will be done if we succumb to them.
The alternative is to be unflagging and unflinching in our demand that Glass-Steagall be reinstituted and the biggest banks be broken up. The question is whether the unfolding Libor scandal will provide enough ammunition and energy to finally get the job done.
ROBERT B. REICH, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest is an e-book, “Beyond Outrage.” He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
You now get it right?
In the latter part of George Bush JNR’s second term – he appointed a guy named Hank Paulson as Assistant Treasurer – see trailer about this appointment below:
Bush Nominates Wall Street Chief for Treasury Job
| Publisher: New YorkTimes | Date: May 31st 2006 | Link to On-Line Story. | By EDMUND L. ANDREWS and JIM RUTENBERG |
If confirmed by the Senate, Mr. Paulson would succeed John W. Snow at a time when the economy, while strong, is facing fresh challenges from high energy prices, a falling dollar and shakiness in the stock market, where the Dow Jones industrial average fell 184 points, or 1.6 percent, Tuesday.
Mr. Paulson, 60, is chairman and chief executive of the Goldman Sachs Group and one of Wall Street’s most highly compensated executives, with a net worth estimated at more than $700 million. He had initially rebuffed overtures about the Treasury job, which is widely viewed as having declined in influence and prestige during Mr. Bush’s presidency.
But Mr. Bush and other officials — eager to bring aboard someone who could potentially do for this administration what another former Goldman chief, Robert E. Rubin, did for President Bill Clinton as a senior economic adviser and as Treasury chief — persisted. They enlisted mutual friends to persuade Mr. Paulson to accept, and had an advantage in Mr. Bush’s new chief of staff, Joshua B. Bolten, a former Goldman executive. … read more …
Now – we all saw Paulson fronting the cameras during the early stages of the GFC in 2007 and giving the World reason to believe that the US Treasury was on top of the problem. It’s important to give you some of Mr Paulson’s background. In a ‘TIME” Special edition titled “25 People to Blame for the Financial Crisis” Hank Paulson is on the list – comments made include:
| Link to On-Line Story. |
When Paulson left the top job at Goldman Sachs to become Treasury Secretary in 2006, his big concern was whether he’d have an impact. He ended up almost single-handedly running the country’s economic policy for the last year of the Bush Administration. Impact? You bet. Positive? Not yet. The three main gripes against Paulson are that he was late to the party in battling the financial crisis, letting Lehman Brothers fail was a big mistake and the big bailout bill he pushed through Congress has been a wasteful mess.
The story doing the rounds about Paulson at the time of the Treasury appointment was that to clinch the deal, and for Paulson to join Bush’s team, Paulson did a deal on his Goldman Sachs $400 million bonus when the Treasury allowed him to keep it ‘tax-free’. During the GFC crisis his personal wealth was reported to be $750 million. How he earned that wealth is another interesting story.
Goldman Sachs invented the now termed ‘sub-prime’ market during Paulson’s term at the Head of the Goldman Sachs Management team. They all had a good thing going and while property prices kept inflating, nobody was a looser or concerned.
If anyone saw the movie – ‘MARGIN CALL’ – with Jeremy Irons, Simon Baker, Kevin Spacey and Demi Moore, well the plot story for that movie is largely based on how Goldman Sachs pulled off the greatest PONZI scheme ever and were never made to pay a dime back.
These Wall Street traders and their cousins across the Atlantic are out of control – Leaders of the World are not game to take them on.
These ‘sharks’ are still feeding in everybody’s backyard, the regulators open the gates to let them in and are too scared to go into the water to try and catch then.
Wake up you bunch of fuckwits – you don’t try to catch these killer sharks – you fuckin’ shoot them.
Have your say where it counts: – contact your Local Federal Representative via the links below and let them know how you feel about this, or any other topic that you feel strongly about – or you can just post a comment below and let off some steam.
The EYE-BALL Guru …