giovedì 1 luglio 2010

Reflexivity and Fraud: Manipulating Polls, Prices, Perceptions, and Outcomes

Reflexivity and Fraud: Manipulating Polls, Prices, Perceptions, and Outcomes

June 30th, 2010 by MaxKeiser

Any serious student of markets knows the ‘Efficient Market Theory’ is hokum. George Soros’ ‘Reflexivity Theory’ rules. In short, prices change perception and since most trading is done based on perception the case for fundamental analysis goes out the window. Example: dot coms in 2000. Into this mix add the fraudsters on Wall St. who manipulate prices – not to make or lose money per se – but to manipulate perceptions. We saw this in 2008 when stock prices were manipulated by Wall St. to give the impression that the banking sector was about to collapse. The government acted on that perception and handed trillions over to the fraudsters.

The same can be said of rigged polling results. Changing the perception of the public mood can change the outcome. Because people act based on perception, not reality. The popular website DailyKos is suing a pollster for this very reason.

Recently, I called for some favors from friends who are connected with the MPAA (I served on the board of the Creative Coalition) to stop Cantor Fitzgerald’s box office futures contracts because I knew from my experience running HSX/Cantor that insiders were abusing their position in ways that were not consistent with free market capitalist principles and I hated the thought of another American industry getting torched by Wall St.

In the case of Cantor Exchange and Trend Exchange, this means moving prices outside of the ‘price discovery’ mechanism; producing exogenous results for nefarious ends.

Government officials hoping to restore balance and accountability to markets are, unfortunately, beholden to the market riggers and perception manipulators who throw a few dollars at the politicians to finance their election campaigns. We cannot expect anyone working inside government to stop this abuse. Only through direct citizen action can any change happen. The recent boycott of BP, in my opinion, should be expanded until BP’s stock is driven down to zero. And if ExxonMobil comes in and takes them over, then the boycott should move over to Exxon.

In a more perfect world, the Federal Reserve Bank should have kept interest rates high enough to deter the market riggers and perception distorters in the vein of Paul Volcker (now marginalized for obvious reasons). In other words, the tools to rectify the economy are within government’s grasp.

The government needs to fight the perception, put out by a complicit media, that doing the right thing is somehow counter productive. America needs to stop worrying about what the rest of the world perceives as its short comings and focus instead on taking the necessary actions required to give markets what they need to restore vitality, transparency, and integrity across all the various trading platforms that comprise the backbone of our economy.




WorldReports, 1 July 2010 00:01

The following banks and currency exchanges are mentioned in this report:

American Express Bank International
Banco Santander SA
Bank of America
Casa de Cambio Puebla SA
Citigroup, Inc.
HSBC Holdings, London and Mexico
Mexican street currency-exchange firms [3,000]
Standard Chartered PLC, London
Wachovia, including London
Wells Fargo
Western Union


Some time ago, we learned that Wachovia had consulted its lawyers to establish whether they could sue us for describing the bank, among others, as a criminal enterprise. Their lawyers are believed to have advised them, in so many words, that, not least given investigative journalistic freedom of speech considerations, our observations represented 'fair comment'. Behind that advice lay the knowledge that since Wachovia was involved in money laundering drug money, we might well know this and be able to prove it. So the matter was dropped.

As the entire 'Black' Octopus criminal carousel unravels faster than the kleptocracy can keep up with events, other sources are now starting to do our exposure work for us. Late in the day, as usual: but better late than never. We therefore take the opportunity to post, verbatim, the following article by Michael Smith for Bloomberg, which of course proves our point. Wachovia, Wells Fargo and Bank of America, for starters, are egregious criminal enterprises. Money laundering of drug proceeds is an unspeakable crime and the most senior officials of these institutions should be arrested and forced to suffer SEVERE consequences. But that isn't happening.


We are sick and tired of the way the so-called 'mainstream' media are waffling about every nuance under the sun and OMITTING the central issue: RAMPANT CRIMINALITY and the banks' open-ended breaches of the law, and their arrogance based on fears that they might collapse.

Securitisation is ILLEGAL in the United States and in all Common Law countries, as we have demonstrated and proved with the aid of impeccable outside academic research. Yet there has been NO RESPONSE TO OUR EXPOSURE OF THIS FLOUTING OF THE RULE OF LAW, EITHER.

The following Bloomberg report indicates that, at long last, some 'mainstream' reporters have managed to lift themselves off their brains and to start exposing the truth. Separately, we have been exposing drug-trafficking operations in our title The Latin American Times, and continue to do so. You may also be interested to know that before his 'switch', following the 'bait' during which he stole the Editor's $35,000 LOAN which should have been repaid at arms' length plus 7% per annum for two years, on 11th June 2007, Wanta told the Editor: 'If you expose the drug traffickers, they will kill you'. We listed that threat among the 37 threats against the Editor so far received.

[Note: With interpolations by the Editor].

By Michael Smith

June 29 (Bloomberg) -- Just before sunset on April 10, 2006, a DC-9 jet landed at the international airport in the port city of Ciudad del Carmen, 500 miles east of Mexico City. As soldiers on the ground approached the plane, the crew tried to shoo them away, saying there was a dangerous oil leak. So the troops grew suspicious and searched the jet.

They found 128 black suitcases, packed with 5.7 tons of cocaine, valued at $100 million. The stash was supposed to have been delivered from Caracas to drug traffickers in Toluca, near Mexico City, Mexican prosecutors later found. Law enforcement officials also discovered something else.

The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America Corp., Bloomberg Markets magazine reports in its August 2010 issue.

This was no isolated incident. Wachovia, it turns out, had made a habit of helping move money for Mexican drug smugglers. Wells Fargo & Co., which bought Wachovia in 2008, has admitted in court that its unit failed to monitor and report suspected money laundering by narcotics traffickers -- including the cash used to buy four planes that shipped a total of 22 tons of cocaine.

The admission came in an agreement that Charlotte, North Carolina-based Wachovia struck with federal prosecutors in March, and it sheds light on the largely undocumented role of U.S. banks in contributing to the violent drug trade that has convulsed Mexico for the past four years.


Wachovia admitted it didn't do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That's the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history -- a sum equal to one-third of Mexico's current gross domestic product.

"Wachovia's blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations", says Jeffrey Sloman, the Federal Prosecutor who handled the case.

Since 2006, more than 22,000 people have been killed in drug-related battles that have raged mostly along the 2,000-mile (3,200-kilometer) border that Mexico shares with the U.S. In the Mexican city of Ciudad Juarez, just across the border from El Paso, Texas, 700 people had been murdered this year as of mid- June. Six Juarez police officers were slaughtered by automatic weapons fire in a midday ambush in April.

Rondolfo Torre, the leading candidate for governor in the Mexican border state of Tamaulipas, was gunned down yesterday, less than a week before elections in which violence related to drug trafficking was a central issue.


Mexican President Felipe Calderon vowed to crush the drug cartels when he took office in December 2006, and he's since deployed 45,000 troops to fight the cartels.

They've had little success.

Among the dead are police, soldiers, journalists and ordinary citizens. The United States has 'pledged' Mexico $1.1 billion in the past two years to aid in the fight against narcotics cartels.

[EDITOR'S INSERT: This is absurd. Under the standard double-mindedness, dialectical non-ethic that characterises the criminalist behaviour of elements of the US Government, law enforcement and the Drug Enforcement Administration battle valiantly against the proliferation of Mexican drug gangs, which now operate in every corner of the United States. Meanwhile, the drug offensive was organised and orchestrated by CIA operatives in Latin America in the 1970s and 1980s, aided by Israeli 'Black' intelligence headed by David Kimche (who died of brain cancer on 8th March 2010) and Michael Harari. Their involvement is proven by the Cutolo Affidavit dated 11th March 1980.

The military officer (Cutolo) was subsequently murdered, along with 'Bo' Baker and others because of their knowledge inter alia of this criminal activity. The barrels of precursor chemicals found in the forests fo Colombia and elsewhere did not materialse from nowhere. The 'Anglo-Saxons' and their nefarious Israeli cutouts took over and organised the disparate competing Latin American gangs, establishing a self-perpetuating scoourge run by peasant criminals: a perfect cut-out.

Incidentally, after David Kimche died, The Daily Telegraph boobed by publishing a photograph in which he was shown (engaged in negotiations with the Lebanese in 1972) but wrongly attributed. We have published a recent issue of Arab-Asian Affairs (which title we bought unknowingly from Kimche's brother, Jon Kimche, in 1975). Jon Kimche used to come to our office, as he continued for a time as Editor (until he doubled his price, whereupon we fired him). We are therefore familiar with the facial characteristics of the Kimche brothers. Investigations by this service revealed that ALL picture representations of David Kimche published in The Jerusalem Post, Haaretz, The Daily Telegraph, The Times and US newspapers have been FRAUDULENT all along.

They have all identified several individuals wrongly as David Kimche and continue to do so after his death. Why? To protect ongoing and past, highly incriminating and sensitive drug operations].

In May, President Barack Obama said he'd send 1,200 National Guard troops, adding to the 17,400 agents on the U.S. side of the border to help stem drug traffic and illegal immigration.

Behind the carnage in Mexico is an industry that supplies hundreds of tons of cocaine, heroin, marijuana and methamphetamines to Americans. The cartels have built a network of dealers in 231 U.S. cities, taking in about $39 billion in sales annually, according to the Justice Department.


Twenty million people in the U.S. regularly use illegal drugs, spurring street crime and wrecking families. Narcotics cost the U.S. economy $215 billion a year -- enough to cover health care for 30.9 million Americans -- in overburdened courts, prisons and hospitals and lost productivity.

"It's the banks laundering money for the cartels that finances the tragedy", says Martin Woods, Director of Wachovia's anti-money-laundering unit in London from 2006 to 2009.

Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia's branch network.

"If you don't see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you're missing the point", Woods says.


Wachovia is just one of the U.S. and European banks that have been used for drug money laundering. For the past two decades, Latin American drug traffickers have gone to U.S. banks to cleanse their dirty cash, says Paul Campo, head of the U.S. Drug Enforcement Administration's financial crimes unit.

Miami-based American Express Bank International paid fines in both 1994 and 2007 after admitting that it had failed to spot and report drug dealers laundering money through its accounts. Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.

Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009. Mexican drug dealers used shell companies to open accounts at London-based HSBC Holdings Plc, Europe's biggest bank by assets, an investigation by the Mexican Finance Ministry found.


Those two banks weren't accused of wrongdoing. Bank of America spokeswoman Shirley Norton and HSBC spokesman Roy Caple say laws bar them from discussing specific clients. They say their banks strictly follow the government rules.

"Bank of America takes its anti-money-laundering responsibilities very seriously". Norton says. [EDITOR: Translation: This is a deliberately vacuous, meaningless and empty statement].

A Mexican judge on January 22 accused the owners of six centros cambiarios, or money changers, in Culiacan and Tijuana of laundering drug funds through their accounts at the Mexican units of Banco Santander SA, Citigroup Inc. and HSBC, according to court documents filed in the case.

The money changers are in jail while being tried. Citigroup, HSBC and Santander, which is the largest Spanish bank by assets, weren't accused of any wrongdoing.

The three banks say Mexican law bars them from commenting on the case, adding that they each carefully enforce anti-money-laundering programs.

HSBC has stopped accepting dollar deposits in Mexico, and Citigroup no longer allows noncustomers to change dollars there. Citigroup detected suspicious activity in the Tijuana accounts, reported it to regulators and closed the accounts, spokesman Paulo Carreno says. [EDITOR: Yeah, after the event and after the temperature got too hot].


On June 15, the Mexican Finance Ministry announced it would set limits for banks on cash deposits in dollars. Mexico's drug cartels have become multinational criminal enterprises.

Some of the gangs have delved into other illegal activities such as gunrunning, kidnapping and smuggling people across the border, as well as into seemingly legitimate areas such as trucking, travel services and air cargo transport, according to the us Justice Department's National Drug Intelligence Center.

These criminal empires have no choice but to use the global banking system to finance their businesses, Mexican Senator Felipe Gonzalez says.

"With so much cash, the only way to move this money is through the banks", says Gonzalez, who represents a central Mexican state and chairs the senate public safety committee.

[EDITOR: In January 2009, Sr. Maria Antonio Costa, head of the Vienna-based UNDOC, told the Austrian journal Profil in an interview that the only liquidity in the interbank sector during the second half of 2008 was drug money. Actually, he meant from the discontinuity that took place on 10-12 September, after which the Editor received three gunshots on our voicemail: see passim].

Gonzalez, a member of Calderon's National Action Party, carries a .38 revolver for protection.

"I know this won't stop the narcos when they come through that door with machine guns". he says, pointing to the entrance to his office. "But at least I'll take one with me".


No bank has been more closely connected with Mexican money laundering than Wachovia. Founded in 1879, Wachovia became the largest bank by assets in the southeastern U.S. by 1900. After the Great Depression, some savvy people in North Carolina called the bank "Walk-Over-Ya" because it had foreclosed on farms in the region.

By 2008, Wachovia was the sixth-largest American lender, and it faced $26 billion in losses from subprime mortgage loans. That cost Wachovia Chief Executive Officer Kennedy Thompson his job in June 2008.

Six months later, San Francisco-based Wells Fargo, which dates from 1852, bought Wachovia for $12.7 billion, creating the largest network of bank branches in the U.S. Thompson, who now works for private-equity firm Aquiline Capital Partners LLC in New York, declined to comment.

As Wachovia's balance sheet was bleeding, its legal woes were mounting. In the three years leading up to Wachovia's agreement with the Justice Department, grand juries served the bank with 6,700 subpoenas requesting information.


The bank didn't react quickly enough to the prosecutors' requests and failed to hire enough investigators, the U.S. Treasury Department said in March. After a 22-month investigation, the Justice Department on March 12 charged Wachovia with violating the Bank Secrecy Act by failing to run an effective anti-money-laundering program.

Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its detection systems. Wachovia's new owner paid $160 million in fines and penalties, less than 2 percent of its $12.3 billion profit in 2009.

If Wells Fargo keeps its pledge, the U.S. government will, according to the agreement, drop all charges against the bank in March 2011. [EDITOR: WHAT A SCANDAL].

Wells Fargo regrets that some of Wachovia's former anti-money-laundering efforts fell short, spokeswoman Mary Eshet says. Wells Fargo has invested $42 million in the past three years to improve its anti-money-laundering program and has been working with regulators, she says.


"We have substantially increased the caliber and number of staff in our international investigations group, and we also significantly upgraded the monitoring software", Eshet says. The agreement bars the bank from contesting or contradicting the facts in its admission.

The bank declined to answer specific questions, including how much it made by handling $378.4 billion -- including $4 billion of cash-from Mexican exchange companies. [EDITOR: PROTECTED].

The 1970 Bank Secrecy Act requires banks to report all cash transactions above $10,000 to regulators and to tell the Government about other suspected money-laundering activity.

Big banks employ hundreds of investigators and spend millions of dollars on software programs to scour accounts. [EDITOR: GREAT. BUT HASN'T ADDRESSED THE BANKS' CRIMINALITY].

No big U.S. bank -- Wells Fargo included -- has ever been indicted for violating the Bank Secrecy Act or any other Federal law. Instead, the Justice Department settles criminal charges by using deferred-prosecution agreements, in which a bank pays a fine and promises do it again.


Large banks are protected from indictments by a variant of the too-big-to-fail theory.

Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets, says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering.

The theory is like a get-out-of-jail-free card for big banks, Blum says. [EDITOR: Jack Blum is a highly respected investigator, a man of the highest integrity and calibre].

"There's no capacity to regulate or punish them because they're too big to be threatened with failure", Blum says. "They seem to be willing to do anything that improves their bottom line, until they're caught". [EDITOR: ACCURATE, ACCURATE, ACCURATE, ACCURATE].

Wachovia's run-in with Federal prosecutors hasn't troubled investors. Wells Fargo's stock traded at $30.86 on March 24, up 1 percent in the week after the March 17 agreement was announced.

Moving money is central to the drug trade -- from the cash that people tape to their bodies as they cross the U.S.-Mexican border, to the $100,000 wire transfers they send from Mexican exchange houses to big U.S. banks.


In Tijuana, 15 miles south of San Diego, Gustavo Rojas has lived for a quarter of a century in a shack in the shadow of the 10-foot-high (3-meter-high) steel border fence that separates the U.S. and Mexico there. He points to holes burrowed under the barrier.

"They go across with drugs and come back with cash," Rojas, 75, says.

"This fence doesn't stop anyone".

Drug money moves back and forth across the border in an endless cycle. In the U.S., couriers take the cash from drug sales to Mexico -- as much as $29 billion a year, according to U.S. Immigration and Customs Enforcement. That would be about 319 tons of $100 bills. [EDITOR: NO. $45 BILLION].

They hide it in cars and trucks to smuggle into Mexico. There, cartels pay people to deposit some of the cash into Mexican banks and branches of international banks. The narcos launder much of what's left through money changers.


Anyone who has been to Mexico is familiar with these street-corner money changers; Mexican regulators say there are at least 3,000 of them from Tijuana to Cancun, usually displaying large signs advertising the day's dollar-peso exchange rate.

Mexican banks are regulated by the National Banking and Securities Commission, which has an anti-money-laundering unit; the money changers are supposedly policed by Mexico's Tax Service Administration, which has no such unit.

By law, the money changers have to demand identification from anyone exchanging more than $500. They also have to report transactions higher than $5,000 to regulators.

The cartels get around these requirements by employing legions of individuals -- including relatives, maids and gardeners -- to convert small amounts of dollars into pesos or to make deposits in local banks. After that, cartels wire the money to a multinational bank.


The people making the small money exchanges are known as Smurfs, after the cartoon characters.

"They can use an army of people like Smurfs and go through $1 million before lunchtime", says Jerry Robinette, who oversees U.S. Immigration and Customs Enforcement operations along the border in east Texas.

The U.S. Treasury has been warning banks about big Mexican- currency-exchange firms laundering drug money since 1996. By 2004, many U.S. banks had closed their accounts with these companies, which are known as casas de cambio.

Wachovia ignored warnings by regulators and police, per the deferred-prosecution agreement.

"As early as 2004, Wachovia understood the risk", the bank admitted in court. "Despite these warnings, Wachovia remained in the business".

One customer that Wachovia took on in 2004 was Casa de Cambio Puebla SA, a Puebla, Mexico-based currency-exchange company. Pedro Alatorre, who ran a Puebla branch in Mexico City, had created front companies for cartels, according to a pending Mexican criminal case against him.


A Federal Grand Jury in Miami indicted Puebla, Alatorre and three other executives in February 2008 for drug trafficking and money laundering. In May 2008, the Justice Department sought extradition of the suspects, saying they used shell firms to launder $720 million through U.S. banks.

Alatorre has been in a Mexican jail for 2 1/2 years. He denies any wrongdoing, his lawyer Mauricio Moreno says. Alatorre has made no court-filed responses in the U.S.

During the period in which Wachovia admitted to moving money out of Mexico for Puebla, couriers carrying clear plastic bags stuffed with cash went to the branch Alatorre operated at the Mexico City airport, according to surveillance reports by Mexican police.

Alatorre opened accounts at HSBC on behalf of front companies, Mexican investigators found.

Puebla executives used the stolen identities of 74 people to launder money through Wachovia accounts, Mexican prosecutors say in court-filed reports.


"Wachovia handled all the transfers, and they never reported any as suspicious", says Jose Luis Marmolejo, former head of the Mexican Attorney General's financial crimes, now in private practice.

In November 2005 and January 2006, Wachovia transferred a total of $300,000 from Puebla to a Bank of America account in Oklahoma City, according to information in the Alatorre cases in the United States and Mexico.

Drug smugglers used the funds to buy the DC-9 through Oklahoma City aircraft broker U.S. Aircraft Titles Inc., according to financial records cited in the Mexican criminal case. U.S. Aircraft Titles President Sue White declined to comment.

On April 5, 2006, a pilot flew the plane from St. Petersburg, Florida, to Caracas to pick up the cocaine, according to the DEA. Five days later, troops seized the plane in Ciudad del Carmen and burned the drugs at a nearby army base.


"I am sure Wachovia knew what was going on", says jJose Marmolejo, who oversaw the criminal investigation into Wachovia's customers.

"It went on too long and they made too much money not to have known".

At Wachovia's anti-money-laundering unit in London, Woods and his colleague Jim DeFazio, in Charlotte, say they suspected that drug dealers were using the bank to move funds.

Woods, a former Scotland Yard investigator, spotted illegible signatures and other suspicious markings on traveler's checks from Mexican exchange companies, he said in a September 2008 letter to the U.K. Financial Services Authority. He sent copies of the letter to the DEA and Treasury Department in the United States.

Woods, 45, says his bosses instructed him to keep quiet and tried to have him fired, according to his letter to the FSA. In one meeting, a bank official insisted Woods shouldn't have filed suspicious activity reports to the Government, as both US and UK laws require.


"I was shocked by the content and outcome of the meeting, genuinely traumatized", Woods wrote.

In the U.S., DeFazio, a Federal Bureau of Investigation agent for 21 years, says he told bank executives in 2005 that the DEA was probing the transfers through Wachovia to buy the planes.

Bank executives spurned recommendations to close suspicious accounts, DeFazio, 63, says.

"I think they looked at the money and said, 'The hell with it. We're going to bring it in, and look at all the money we'll make'", DeFazio says.

"I didn't want anything from them", he says. "I just wanted to get out".

Woods, who resigned from Wachovia in May 2009, now advises banks on how to combat money laundering. He declined to discuss details of Wachovia's actions.

U.S. Comptroller of the Currency John Dugan told Woods in a March 19 2010 letter that his efforts had helped the United States build its case against Wachovia. He wrote:

"You demonstrated great courage and integrity by speaking up when you saw problems".

It was the Puebla investigation that led U.S. authorities to the broader probe of Wachovia. On May 16, 2007, DEA agents conducted a raid of Wachovia's international banking offices in Miami. They had a court order to seize Puebla's accounts.

U.S. prosecutors and investigators then scrutinized the bank's dealings with Mexican-currency-exchange firms. That led to the March deferred-prosecution agreement.

With Puebla's Wachovia accounts seized, Alatorre and his partners shifted their laundering scheme to HSBC, according to financial documents cited in the Mexican criminal case against Alatorre.

In the three weeks after the DEA raided Wachovia, two of Alatorre's front companies, Grupo ETPB SA and Grupo Rahero SC, made 12 cash deposits totaling $1 million at an HSBC Mexican branch, Mexican investigators found.


The funds financed a Beechcraft King Air 200 plane that police seized on December 29, 2007, in Cuernavaca, 50 miles south of Mexico City, according to information in the case against Alatorre.

For years, Federal authorities watched as the wife and daughter of Oscar Oropeza, a drug smuggler working for the Matamoros-based Gulf Cartel, deposited stacks of cash at a Bank of America branch on Boca Chica Boulevard in Brownsville, Texas, less than 3 miles from the border.

Investigator Robinette sits in his pickup truck across the street from that branch. It's a one-story, tan stucco building next to a Kentucky Fried Chicken outlet. Robinette discusses the Oropeza case with Tom Salazar, an agent who investigated the family.

"Everybody in there knew who they were -- the tellers, everyone", Salazar says.

"The bank never came to us, though". [EDITOR: COURSE NOT. IT'S A C.I.A. CRIMINAL ENTERPRISE]


The Oropeza case gives a new, literal meaning to the term money laundering. Oropeza's wife, Tina Marie, and daughter Paulina Marie, deposited stashes of $20 bills several times a day into Bank of America accounts, Salazar says. Bank employees knew the Oropezas by smelling their money.

"I asked the tellers what they were talking about, and they said the money had this sweet smell like Bounce, those sheets you throw into the dryer", Salazar says. "They told me that when they opened the vault, the smell of Bounce just poured out".

Oropeza, 48, was arrested 820 miles from Brownsville, Texas.. On May 31, 2007, police in Saraland, Alabama, stopped him on a traffic violation. Checking his record, they learned of the investigation in Texas. They searched the van and discovered 84 kilograms (185 pounds) of cocaine hidden under a false floor. That allowed Federal agents to freeze Oropeza's bank accounts and search his marble-floored home in Brownsville, Robinette says.

Inside, investigators found a supply of Bounce alongside the clothes dryer.

All three Oropezas pleaded guilty in U.S. District Court in Brownsville, TX, to drug and money-laundering charges in March and April 2008. Oscar Oropeza was sentenced to 15 years in prison; his wife was ordered to serve 10 months and his daughter got 6 months.

Bank of America's Norton says: "We not only fulfilled our regulatory obligation, but we proactively worked with law enforcement on these matters". [EDITOR: NEFARIOUS HUMBUG].

Prosecutors have tried to halt money laundering at American Express Bank International twice. In 1994, the bank, then a subsidiary of New York-based American Express Co., pledged not to allow money laundering again after two employees were convicted in a criminal case involving drug trafficker Juan Garcia Abrego.

In 1994, the bank paid $14 million to settle. Five years later, drug money again flowed through American Express Bank. Between 1999 and 2004, the bank failed to stop clients from laundering $55 million of narcotics funds, the bank admitted in a deferred-prosecution accord in August 2007.

It paid $65 million to the United States and promised not to break the law again. The government dismissed the criminal charge a year later. American Express sold the bank to the London-based Standard Chartered PLC in February 2008 for $823 million.


Banks aren't the only financial institutions that have turned a blind eye to drug cartels in moving illicit funds. Western Union Co., the world's largest money transfer firm, agreed to pay $94 million in February 2010 to settle civil and criminal investigations by the Arizona Attorney General's office.

Undercover state police posing as drug dealers bribed Western Union employees to illegally transfer money, says Cameron Holmes, an assistant Attorney General.

"Their allegiance was to the smugglers", Holmes says. "What they thought about during work was 'How may I please my highest- spending customers the most?'"

Workers in more than 20 Western Union offices allowed the customers to use multiple names, pass fictitious identifications and smudge their fingerprints on documents, court records say.

"In all the time we did undercover operations, we never once had a bribe turned down", says Holmes, citing court affidavits.

Western Union has made significant improvements, it complies with anti-money-laundering laws and works closely with regulators and police, spokesman Tom Fitzgerald says.

For four years, Mexican authorities have been fighting a losing battle against the cartels. The police are often two steps behind the criminals. Near the southeastern corner of Texas, in Matamoros, more than 50 combat troops surround a police station.

US officers take two suspected drug traffickers inside for questioning. Nearby, two young men wearing white T-shirts and baggy pants watch and whisper into radios. These are los halcones (the falcons), whose job is to let the cartel bosses know what the police are doing.


While the police are outmaneuvered and outgunned, ordinary Mexicans live in fear. Rojas, the man who lives in the Tijuana slum near the border fence, recalls cowering in his home as smugglers shot it out with the police.

"The only way to survive is to stay out of the way and hope the violence, the bullets, don't come for you," Rojas says.

To make their criminal enterprises work, the drug cartels of Mexico need to move billions of dollars across borders. That's how they finance the purchase of drugs, planes, weapons and safe houses, Senator Gonzalez says.

"They are multinational businesses, after all", says Gonzalez, as he slowly loads his revolver at his desk in his Mexico City office. "And they cannot work without a bank."

To contact the reporter on this story:
Michael Smith in Santiago, Chile, at
Last Updated: June 29, 2010 00:00 EDT

UK Man Loses Homes Takes Bank Hostages

Gunman's threat to bank hostages: 'I've lost my house... you're going to lose your money'

By Rebecca Camber, Ryan Kisiel and Colin Fernandez
MailOnline, 30th June 2010

The armed robber who took 15 people hostage in a bank shouted 'I've lost a house, you're going to lose your money', it was alleged yesterday.

Wielding an imitation shotgun, the man named locally as Matthew Nutley, 36, is said to have threatened to kill two terrified members of staff if the bank manager didn't open the safe.

Last night the home of Nutley's 63-year-old mother Ann was searched by police with sniffer dogs.

Don't move: Police officer point Tasers at a suspect in a white  boiler suit as the siege comes to an end yesterday evening

Don't move: Police officer point Tasers at a suspect in a white boiler suit as the siege comes to an end yesterday evening

Cuffed: The suspect has his hands handcuffed behind his back as he  smokes a cigarette outside the bank

Cuffed: The suspect has his hands handcuffed behind his back as he smokes a cigarette outside the bank

Yesterday hostages told how the robber, who triggered a three-hour siege at a Barclays branch in Ashford near Heathrow, then bizarrely plied them with vodka.

Dressed in a boiler suit and wearing welding goggles, the masked raider staggered into the bank clutching a fake gun and a Tesco bag containing two litres of vodka, cigarettes and a batch of boiler suits.

Slurring his words, he is said to have ordered the bank manager to empty the safe, shouting: 'I've lost a house, you're going to lose your money.'

Hostage Dan Beedell

Hostage: Dan Beedell spoke of the surreal scenes inside the bank standoff, where the robber was yelling abuse one minute and sharing vodka the next

In a scene reminiscent of the Clive Owen movie Inside Man, he allegedly put a gun to the head of one of his prisoners, threatening to shoot if they did not don boiler suits to confuse police.

The gunman also forced staff to spray paint the windows black as armed police surrounded the building, it was claimed.

But once the bank manager had handed over a bag of cash, the robber appeared to relax and tried to get his hostages to drink vodka with him.

Unsteady on his feet, it was claimed he also offered his prisoners cigarettes, saying he wanted them to be 'calm and relaxed' even though they had their hands bound with plastic ties.

Hostage Dan Beedell, 31, who works as a youth pastor in Ashford, said: 'I can only assume that he was very angry with the bank for some reason. He came in and was very demanding and assertive. He shouted "everyone get down on the f****** ground".

'He was carrying a Tesco black recyclable bag that had the boiler suits in and two litre bottles of Absolut vodka. Four boiler suitswere dropped on to the floor and he asked four of us to put them on.

'I'm quite a big guy and was struggling to get them above my shoulders. He then put the gun to the back of my head and I was able to do it but not zip it up.

'I asked if I could use Sellotape... to close it and he agreed.

'He then told us to drink from the bottles of vodka but people were worried that they were poisoned because the seals had been broken.

'People didn't drink from them in the end and he quickly forgot about it. It was quite clear that he had a lot to drink as he was stumbling and slurring some of his words.

Bank siege

Police stand outside a bank in Ashford, West of London, after a gunman attempted to rob the bank released his hostages and gave himself up

Similarly dressed hostages leave the bank

Plan: Hostages were told to put on similar boiler suits by the would-be bank robber

Bank siege

British army bomb disposal experts looks on near a bank in Ashford, West of London, after a gunman attempted to rob the bank

'It was really frightening as the man was out of control, but it wasn't until much later that it all hit home how dangerous it was.'

Twenty minutes into the siege, the raider freed some hostages, including Mr Beedell and a woman suffering from a panic attack.

Police pounced on Mr Beedell, thinking he was the gunman.

After a tense three-hour standoff, the robber finally surrendered.

Bank siege

Freed: Hostages being released from the bank late yesterday afternoon

Bank siege

Policeman blocks the road near a bank in Ashford, West of London, after a gunman attempted to rob the bank

Still clutching a smouldering cigarette, he was led out of the bank with guns trained on him. A replica firearm was recovered at the scene.

Last night police had only just begun to question the man who was apparently so intoxicated that he was not considered fit for interview for almost 20 hours.

The man went into Barclays in Church Road, Ashford, Middlesex,  shortly before 4pm, according to Surrey Police

The man went into Barclays in Church Road, Ashford, Middlesex, shortly before 4pm, according to Surrey Police

Employees at a coffee shop nearby described the man as a loner. 'He would come in each day and order exactly the same thing - a large hot chocolate with cream,' a member of staff said. 'He would sit there for three orfour hours surfing the internet on a laptop. Sometimes he would sit outside smoking a cigarette.'

A Surrey Police spokesman said: 'A man in his 30s has been arrested and is still in police custody.'

A spokesman for Barclays said: 'This matter is under police investigation, so we are unable to offer any further comment.'

"Broadsheets" on national finance (1921)

"Broadsheets" on national finance (1921)

Author: Stoll, Oswald, Sir, 1866-1942
Subject: England -- Economic policy; England -- Finance and taxation
Publisher: London, W.J. Roberts
Possible copyright status: NOT_IN_COPYRIGHT
Language: English
Call number: AFA-4586
Digitizing sponsor: MSN
Book contributor: Robarts - University of Toronto
Collection: toronto


[Open Library icon]This book has an editable web page on Open Library.

News stories related to the World Bank and IMF

A selection of news stories related to the World Bank and IMF, brought to you by the Bretton Woods Project:

UN pleads for overhaul of existing multilateral machinery, end to US dollar role
InDepthNews, 30 June 2010

Zuma calls for G-20 to initiate IMF reforms
Business Day, 29 June 2010

Greece debt: Government sees hope in privatization despite protests
CS Monitor, 29 June 2010

IMF still prescribing pro-cyclical policies
Third World Network, 28 June 2010

Bangladesh minister trashes World Bank, 26 June 2010

Romania to raise VAT to 24% to meet IMF-imposed deficit goal
Businessweek, 26 June 2010

Pay raises at World Bank, IMF draw criticism
Washington Post, 25 June 2010

Yuan can become alternative reserve currency to US dollar-ADB report: Capital controls can help economic management
Reuters, 24 June 2010

Istituti bancari: associazioni a delinquere

Gli istituti bancari sono associazioni a delinquere legalizzate. Il giudizio è inequivocabile

Siamo una “massa critica” che riunisce cittadini, imprenditori e associazioni di vario genere. Ci definiamo una lobby di popolo nata contro le banche «che hanno illuso i risparmiatori e le piccole aziende con una speculazione finanziaria a tassi usurai».

I “nemici” del Forum Nazionale Antiusura Bancaria sono, appunto, le banche.

L’obiettivo è quello «di abolire ogni privilegio detenuto attualmente dalle banche che lo utilizzano come strumento di pressione e ritorsione».

Segnalazioni unilaterali e discrezionali alle centrali rischi, facile ottenimento dei decreti ingiuntivi per somme non vere, cartolarizzazione dei presunti debiti: non possiamo più adeguarci, non possiamo e non vogliamo più ubbidire. Nessuno può ignorare e calpestare la disperata richiesta di legalità che il sistema paese, i cittadini e le imprese chiedono.

Cittadini e imprese, migliaia di cittadini e imprese in Italia, si vedono costretti a pagare somme non dovute, a essere messe in sofferenza, segnalate alla centrale rischi con la conseguente morte sociale e patrimoniale delle aziende.

L’ Onorevole Scilipoti, che con grande coraggio si è fatto portavoce delle istanze del Forum e del disagio i milioni di italiani vittime di estorsione, ha nelle mani le sorti e le speranze di una Nazione che crede e vede nelle Istituzioni il baluardo per una difficile e dura rinascita.

Chiediamo giustizia, chiediamo che La Legge sia uguale per tutti, al di sopra di ogni ambizione e comodità. Chiediamo un Governo trasparente e non occulto.

Il nostro obiettivo è quello di unirci e diventare numerosi, manifestando il disagio di milioni d’italiani così da sensibilizzare le forze politiche.

Silvestro Dell’Arte
Forum Nazionale Antiusura Bancaria
Regione Toscana
Indirizzo e-mail:

mercoledì 30 giugno 2010

La crisi economica e la moneta di stato

La crisi economica
di Savino Frigiola - 30/06/2010

Fonte: Arianna Editrice

L’attuale crisi economica è simile a quella del 1929 che ha dato origine alla lunga e “grande depressione”. Anche allora è stata costruita dalla cricca bancaria-monetaria imprimendo sul mercato prima una forte circolazione monetaria, con grandi aperture di credito a basso costo per: mutui, anticipazioni d’ogni tipo, per acquisto di titoli, azioni, derivati, ecc. ecc. La corsa generalizzata all’indebitamento si velocizzò poiché la rendita predisposta sugli investimenti era superiore ai tassi pretesi per le anticipazioni. Successivamente, esattamente come oggi, venne ridotta drasticamente la circolazione monetaria mediante il violento ritiro degli affidamenti poco prima facilmente concessi. La conseguente violentissima deflazione attanagliò tutto il mercato; la massa monetaria si contrasse del 30%: il prodotto interno lordo americano cadde in termini reali del 29%, la disoccupazione salì di oltre il 25%, con conseguenti fallimenti a catena di banche ordinarie, imprese, aziende e società d’ogni tipo, non solo sul mercato americano, ma anche su buona parte del mondo. Anche allora, esattamente come è accaduto oggi, l’apparato politico, su occulta strategia della cricca monetaria, convinse di curare i cracks debitori-speculativi spingendo gli Stati, i quali prima si dovevano indebitatarsi con le banche centrali, a garantire credito e liquidità alle banche ordinarie nella speranza che queste a loro volta favorissero investimenti a sostegno della produzione e dei consumi interni. (allora come oggi, con questa ricorrente tecnica, gli unici a trarne profitto sono state e sono solamente le banche centrali) Nonostante che allora venisse fatto credere a tutti che il valore della moneta dipendeva dall'oro che rappresentava, un gruppo di economisti di Chicago propose un piano di riforma che era l’esatto contrario della «inadeguata terapia» adottata (causa primaria della prolungata depressione) e, se il piano fosse stato accettato dalla leadership politica, avrebbe risanato rapidamente l’economia di allora e scongiurate le crisi che si sono da allora succedute, compreso quella attuale, Nel 1933 il «Piano concepito dalla famosa scuola di Chicago» fu vivamente raccomandato al governo dal professor Irving Fisher di Yale, il più grande economista americano dell’epoca; fu lui il primo a capire e a spiegare che il meccanismo del credito così concepito porta alla creazione di massa monetaria senza controllo; ci scrisse persino un libro: «100% Money» Il Piano di Chicago proponeva che fosse restituito allo Stato il monopolio esclusivo dell’emissione monetaria e che fosse vietato alle banche ordinarie la creazione di pseudo-denaro dal nulla con le riserve di fantasia, imponendo alle banche l’obbligo di riserva del 100%. Oggi, le riserve obbligatorie sono ridicolmente basse, anche meno del 3%. Immaginiamo per semplicità un obbligo di riserva del 10%. Ciò significa (grosso modo) che, quando un risparmiatore deposita sul proprio conto corrente cento euro, la banca con quella «riserva» può concedere fidi e prestiti per 1.000 euro; mille euro che non ha, pseudo-capitale creato dal nulla. Questo consente enormi guadagni indebiti alle banche (che lucrano gli interessi sul denaro che non hanno e che creano dal nulla) ma le rende perennemente e ciclicamente instabili esposte agli umori del mercato: se, neanche la maggior parte dei depositanti andasse infatti a ritirare i propri depositi, come è avvenuto di recente principalmente in Inghilterra, si vedrebbe che la banca è insolvente. Così facendo ci concentrerebbero le risorse per l’economia reale e non per quella creativa, finalizzata quasi esclusivamente al finanziario; le anticipazioni sarebbero determinate non già dalla percentuale di riserva permessa, bensì dalla quantità di risparmio esistente nell’economia reale e dalla quantità di denaro messo a disposizione alle banche ordinarie, finalizzato allo sviluppo, sotto controllo del Ministero del Tesoro, mediante operazioni pronto contro termine a tassi estremamente bassi corrispondenti ai costi di stampa ed amministrazione del denaro. (servizio pubblico reso al mercato). Irving Fisher infatti scriveva: «L’essenza del piano è di rendere la moneta indipendente dai prestiti; ossia separare il processo di creazione e distruzione di moneta dal business bancario. Un effetto collaterale sarebbe di rendere le banche più sicure e profittabili; ma l’effetto di gran lunga più importante sarebbe la prevenzione di successioni di grandi boom e depressioni, ponendo fine ai cronici cicli di inflazione e deflazione che sono stati sempre la maledizione dell’umanità e che sono nati, in genere, dall’attività bancaria» Tutto ciò Fisher e la scuola di Chicago (e Keynes era d’accordo) lo rese noto alla politica sin dal 1933 fornendo anche il metodo per controllare l’emissione monetaria per scongiurare decisioni discrezionali della «politica» che tenderebbe ad alluvionare di liquidità il mercato per ragioni elettorali o clientelari. In sintesi il concetto era semplice: mantenere costante il rapporto tra circolazione monetaria e beni da misurare, come sostenuto sempre anche da Auriti, per non creare squilibri e per poter finanziare la produzione a bassi costi. L’altro economista, James Angell, dimostrò che il sistema proposto poteva essere effettivamente imposto ed applicato per legge. Tutto ciò ovviamente, fu respinto dal sistema bancario poiché non voleva rinunciare agli immensi guadagni-indebiti che lucrava creando denaro dal nulla.

Persino Milton Friedman, a cui si imputa la responsabilità della finanza senza regole, era a favore alla riserva obbligatoria al 100 % da parte delle banche ordinarie. Come Allais, anche Friedman sosteneva che la crescita della circolazione monetaria doveva essere proporzionale alla crescita dell’economia reale, con un tasso d’inflazione moderato del 2% annuo, (da non confondersi con l’aumento dei prezzi) per stimolare e sostenere la produzione e quindi i consumi.

Allora queste teorie trovarono valido sostegno anche nel costatare che mentre tutto il mondo era in recessione, uno dei pochissimi Paesi come l’Italia si trovava viceversa con l’economia in espansione. Non si tardò molto a comprendere che ciò era dovuto all’emissione monetaria diretta praticata dallo Stato italiano il quale monetizzava il proprio mercato nazionale realizzando e pagando, con la moneta acquisita a titolo originario e quindi senza indebitarsi, le opere pubbliche di comune interesse. (ricostruzione di larga parte del territorio nazionale senza aumentare ne le tasse ne il debito pubblico) Ad essere precisi, l'emissione monetaria diretta da parte dello Stato era iniziata circa 50 anni prima ed utilizzata nel corso del regno di Umberto Primo essenzialmente per realizzare le infrastrutture necessarie alla nazione italiana da poco riunificata. In moltissime città italiane è ancora possibile osservare i palazzi ed i quartieri, così detti “umbertini”, con le loro inconfondibili linee architettoniche. Ancora più diffusi ed evidenti i complessi urbanistici ed infrastrutturali realizzati su tutto il territorio nazionale dal 1923 in poi. Grandi opere, imponenti complessi di opere pubbliche, intere città, i grandi acquedotti, le grandi bonifiche, tutte dalle inconfondibili linee architettoniche ispirate a quelle del Piacentini; anche queste realizzate senza indebitare lo Stato, senza indebitare i cittadini e senza aumentare le tasse. Siamo il Paese al mondo che vanta la più lunga esperienza positiva in questo campo. Lungi dall'essere attività effimere, tutto ciò che è stato realizzato in questi due periodi, pur impiegando stili architettonici completamenti diversi, è ancora perfettamente efficiente ed ancora utilizzato in larghissima parte da tutte le pubbliche amministrazioni.

Attualmente ci troviamo nel bel mezzo della crisi economica la quale nonostante la frenetica attività posta in essere per minimizzarla e tutte le riassicurazioni diffuse dagli ambienti politici ed economici, con le terapie in atto ed ancor peggio con quelle preannunciate, non sarà ne breve ne lieve. Questa crisi proprio per come è stata realizzata, è dovuta essenzialmente alla drastica riduzione della circolazione monetaria sull'intero mercato, la qual cosa ha avvizzito la liquidità alle aziende ed imprenditori, che ha ridotto l'occupazione, che ha ridotto il reddito alle famiglie, che sta riducendo i consumi e per logica conseguenza il gettito fiscale. Al di là di tutte le chiacchiere, delle previsioni e delle ipotizzate manovre, si esce dalla crisi solo se si riesce a rilanciare la ripresa economica ed occupazionale dell'intero Paese. Non occorre essere grandi economisti per proporre il taglio delle spese e degli “Enti inutili”, basta solo il normale buon senso, anche se ultimamente pare essere anch'esso, congiuntamente alla liquidità, ingrediente alquanto raro. Qualche dubbio affiora quando si ipotizza di utilizzare il previsto maggior introito fiscale per destinarlo ai banchieri, poiché si agisce nella direzione contraria a quella necessaria per la ripresa della occupazione che risulta intimamente connessa a quella dei consumi. Sottrarre ulteriore liquidità dal mercato sia con la minore spesa che con l'aumento del prelevamento impositivo, per far confluire il tutto alla cricca bancaria-monetaria, si ottiene lo stesso risultato di quando si sottopone l'anemico alla terapia dei salassi giornalieri. Pensare di ridurre il pseudo debito pubblico, formatosi in gran parte con l'attuale perverso sistema di monetizzazione del mercato, è follia pura simile a quella dei grandi economisti che sino a pochi giorni prima dello scoppio della crisi rassicuravano che tutto procedeva per il meglio in nome del liberalismo e nel solco del libero mercato. Di fatto, come è stato ampiamente dimostrato, attualmente l'emissione monetaria avviene con l'accensione del debito pubblico corrispondente, pertanto la follia consiste proprio nel ritenere di poter estinguere un debito con una provvista generata da un altro debito; si rasenta il delirio se si considera che al momento dell'emissione monetaria viene emessa la moneta corrispondente all'importo, ma non quella corrispondente agli interessi pretesi, ragion per cui il pagamento potrà avvenire solamente con l'appropriazione da parte della cricca monetaria dei beni del debitore, sia esso pubblico o privato. La liquidità sottratta al mercato con le manovre delle finanziarie, se si vuole scongiurare lo strangolamento dovuto dalla deflazione prodotta, deve essere riemessa sul mercato, la qual cosa provoca ulteriore incremento del debito. A riprova di quanto affermato basta osservare ciò che accade quotidianamente: il debito pubblico a dispetto di tutti gli strombazzamenti continua imperterrito a crescere, mentre proprietà e beni privati e pubblici, quest'ultimi dietro l'innocente dizione della privatizzazione, passano di mano e finiscono alla cricca bancaria-monetaria. Riteniamo giunto il momento di porre fine a questa nefasta sceneggiata, lo Stato deve smettere d'indebitarsi per monetizzare il mercato o per pagare i sui debiti i cui titoli vengono quotati dalle società di reting quotate in borsa orbitanti intorno al sistema bancario-monetario. Se i titoli di debito dello Stato sono buoni e valgono, al punto da essere accettati e scontati dagli avvedutissimi banchieri privati, debbono valere anche i titoli monetari, emessi dallo Stato, come abbiamo dimostrato di saper fare per oltre cento anni.

Questo è l'unico modo serio e duraturo per uscire dalla crisi economica - lo Stato in nome e per conto dei cittadini deve riappropriarsi della funzione monetaria, battere moneta in proprio, senza pertanto generare nuovo debito al momento dell'emissione, acquisirla per titolo originale incamerandone il signoraggio attualmente carpito dalla Banca Centrale, utilizzandola per realizzare opere ed investimenti, e quindi occupazione, di pubblica utilità. - Per riequilibrare il rapporto tra il sistema produttivo e quello creditizio, occorre ripristinare il divieto prima esistente nella vecchia legge bancaria nei confronti delle banche ordinarie, fondazioni e finanziarie collaterali di possedere quote di partecipazione di qualunque attività produttiva. - Per razionalizzare il finanziario, consentire la vendita di azioni, titoli e materie prime, solamente se le consegne avvengono contestualmente ai pagamenti. (lasciare e confinare il gioco d’azzardo nei casinò e nelle sale bingo) - Il credito e le attività creditizie debbono essere a disposizione del mercato e della produzione nelle modalità sottoposte alla sorveglianza del Ministero del Tesoro. (a meno che non si voglia dichiarare ufficialmente l'inutilità della politica e della democrazia, attualmente ridotta a pura rappresentazione scenica)- Nelle more “occorre uno strumento - supplementare per l’iniezione di liquidità a livello nazionale” (parole di Giulio Tremonti), dalle quali trapela che è arrivato il tempo di ripristinare subito l’emissione monetaria diretta da parte dello Stato, parallela a quella della BCE, come da consolidate esperienze trascorse quando insieme alla moneta della Banca d'Italia circolava anche quella emessa dallo Stato italiano.
- E’ necessario che la politica ritorni ad assolvere la sua funzione primaria al servizio delle persone. Ai politici che non possono o non se la sentono di adeguarsi consigliamo pronte e lodevolissime dimissioni a scanso di ristoro delle prebende percepite per servizi mal forniti. Non può essere più consentito distogliere risorse alla sanità, sicurezza, istruzione, ricerca, produzione-occupazione ed al sociale, per continuare a conferirle ai banchieri.

Why the Fed Economist Slam Bloggers

Washington's Blog, June 30, 2010

Did the Fed Economist Slam Bloggers for the Same Reason that Fundamentalist Priests Slammed the Printing Press?

Kartik Athreya of the Richmond Federal Reserve Bank argues that bloggers are stupid, and that only PhD economists have a right to say anything about economics policy.

This distinction is a little ridiculous, given that many of the world’s top PhD economics professors are bloggers.

And it must be noted that the Fed ignores any PhD economist who exercises any scintilla of independence.

For example, all of the PhD economists who say the economy won't recover unless we break up the giant banks are ignored (even if they happen to be former Federal Reserve chairmen or Fed Bank presidents).

And well-known PhD economist James Galbraith is ignored when he argues that - because fraud caused the economic crisis - economists should move into the background, and "criminologists to the forefront".

And of course, the PhD economists calling for a complete audit of the Fed or - heaven forbid - a challenge to Fed powers, are ignored.

In fact, as I pointed out in December, most economists don't exercise any independent thinking because economists are trained to ignore reality:

As I have repeatedly noted, mainstream economists and financial advisors have been using faulty and unrealistic models for years. See this, this, this, this, this and this.

And I have pointed out numerous times that economists and advisors have a financial incentive to use faulty models. For example, I pointed out last month:

The decision to use faulty models was an economic and political choice, because it benefited the economists and those who hired them.

For example, the elites get wealthy during booms and they get wealthy during busts. Therefore, the boom-and-bust cycle benefits them enormously, as they can trade both ways.

Specifically, as Simon Johnson, William K. Black and others point out, the big boys make bucketloads of money during the booms using fraudulent schemes and knowing that many borrowers will default. Then, during the bust, they know the government will bail them out, and they will be able to buy up competitors for cheap and consolidate power. They may also bet against the same products they are selling during the boom (more here), knowing that they'll make a killing when it busts.

But economists have pretended there is no such thing as a bubble. Indeed, BIS slammed the Fed and other central banks for blowing bubbles and then using "gimmicks and palliatives" afterwards.

It is not like economists weren't warning about booms and busts. Nobel prize winner Hayek and others were, but were ignored because it was "inconvenient" to discuss this "impolite" issue.

Likewise, the entire Federal Reserve model is faulty, benefiting the banks themselves but not the public.

However, as Huffington Post notes:

The Federal Reserve, through its extensive network of consultants, visiting scholars, alumni and staff economists, so thoroughly dominates the field of economics that real criticism of the central bank has become a career liability for members of the profession, an investigation by the Huffington Post has found.

This dominance helps explain how, even after the Fed failed to foresee the greatest economic collapse since the Great Depression, the central bank has largely escaped criticism from academic economists. In the Fed's thrall, the economists missed it, too.

"The Fed has a lock on the economics world," says Joshua Rosner, a Wall Street analyst who correctly called the meltdown. "There is no room for other views, which I guess is why economists got it so wrong."

The problems of a massive debt overhang were also thoroughly documented by Minsky, but mainstream economists pretended that debt doesn't matter.

And - even now - mainstream economists are STILL willfully ignoring things like massive leverage, hoping that the economy can be pumped back up to super-leveraged house-of-cards levels.

As the Wall Street Journal article notes:
As they did in the two revolutions in economic thought of the past century, economists are rediscovering relevant work.
It is only "rediscovered" because it was out of favor, and it was only out of favor because it was seen as unnecessarily crimping profits by, for example, arguing for more moderation during boom times.

The powers-that-be do not like economists who say "Boys, if you don't slow down, that bubble is going to get too big and pop right in your face". They don't want to hear that they can't make endless money using crazy levels of leverage and 30-to-1 levels of fractional reserve banking, and credit derivatives. And of course, they don't want to hear that the Federal Reserve is a big part of the problem.

Indeed, the Journal and the economists it quotes seem to be in no hurry whatsoever to change things:
The quest is bringing financial economists -- long viewed by some as a curiosity mostly relevant to Wall Street -- together with macroeconomists. Some believe a viable solution will emerge within a couple of years; others say it could take decades.

Saturday, PhD economist Michael Hudson made the same point:

I think that the question that needs to be asked is how the discipline was untracked and trivialized from its classical flowering? How did it become marginalized and trivialized, taking for granted the social structures and dynamics that should be the substance and focal point of its analysis?...

To answer this question, my book describes the "intellectual engineering" that has turned the economics discipline into a public relations exercise for the rentier classes criticized by the classical economists: landlords, bankers and monopolists. It was largely to counter criticisms of their unearned income and wealth, after all, that the post-classical reaction aimed to limit the conceptual "toolbox" of economists to become so unrealistic, narrow-minded and self-serving to the status quo. It has ended up as an intellectual ploy to distract attention away from the financial and property dynamics that are polarizing our world between debtors and creditors, property owners and renters, while steering politics from democracy to oligarchy...

[As one Nobel prize winning economist stated,] "In pointing out the consequences of a set of abstract assumptions, one need not be committed unduly as to the relation between reality and these assumptions."

This attitude did not deter him from drawing policy conclusions affecting the material world in which real people live. These conclusions are diametrically opposed to the empirically successful protectionism by which Britain, the United States and Germany rose to industrial supremacy.

Typical of this now widespread attitude is the textbook Microeconomics by William Vickery, winner of the 1997 Nobel Economics Prize:
"Economic theory proper, indeed, is nothing more than a system of logical relations between certain sets of assumptions and the conclusions derived from them... The validity of a theory proper does not depend on the correspondence or lack of it between the assumptions of the theory or its conclusions and observations in the real world. A theory as an internally consistent system is valid if the conclusions follow logically from its premises, and the fact that neither the premises nor theconclusions correspond to reality may show that the theory is not very useful, but does not invalidate it. In any pure theory, all propositions are essentially tautological, in the sense that the results are implicit in the assumptions made."
Such disdain for empirical verification is not found in the physical sciences. Its popularity in the social sciences is sponsored by vested interests. There is always self-interest behind methodological madness. That is because success requires heavy subsidies from special interests, who benefit from an erroneous, misleading or deceptive economic logic. Why promote unrealistic abstractions, after all, if not to distract attention from reforms aimed at creating rules that oblige people actually to earn their income rather than simply extracting it from the rest of the economy?

As I have previously written, mainstream economists and financial advisors who promote flawed models are not necessarily bad people:

I am not necessarily saying that mainstream economists were intentionally wrong, or that they lied because it led to promotions or pleased their Wall Street, Fed or academic bosses.

But it is harder to fight the current and swim upstream then to go with the flow, and with so many rewards for doing so, there is a strong unconscious bias towards believing the prevailing myths. Just like regulators who are too close to their wards often come to adopt their views, many economists suffered "intellectual capture" by being too closely allied with Wall Street and the Fed.

As Upton Sinclair said:

It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
See this, this, this, this and this.

Michael Rivero may have the hardest-hitting critique of all:
This seems to be a return to the mindset of the middle ages where only the clergy were allowed to read and interpret the bible and the laity were presumed incapable of comprehending the intricacies and subtle nuances of the faith.

And indeed there is a great deal of similarity between economics and [fundamentalist version of] religion in that both depend on the unquestioning faith of the masses that those pretty printed pieces of paper represent something real, albeit invisible.

But the advent of the printing press led people to take a closer look at the actual content of [fundamentalist version of] religion and it has been revealed not as a complex and sophisticated system but as a mish-mash of half-baked myths and legends often in contradiction with itself and used to enrich the church ....

The same is true of economics. the advent of the blog has led people to take a closer look at the actual content of economics and it has been revealed not as a complex and sophisticated system but as a mish-mash of half-baked theories and math often in contradiction with itself and used to enrich the bankers and conceal their fraud against the public. Athreya is reacting to the blogs the way [fundamentalist] priests reacted to Gutenberg's Printing Press.

The fraud and danger of the Federal Reserve system of banking stands exposed to the public eye, sans the "benefit" of correct interpretation by the self-appointed priests of Mammon. The public now understands that when a private bank issues the public currency at interest, debt will always exceed the available money supply. The public now understands that the Federal Reserve is no more Federal than Federal Express. The public now understands that the Federal Reserve is a legalized counterfeiting operation, that creates the money they loan out out of thin air! The public now understands that the Federal Reserve system of banking, since its creation in 1913, has reduced the value of a dollar down to about four cents! The public now understands that the Federal Reserve system is a pyramid scam that only works when ever larger populations of borrowers can be found, and that once an entire nation or planet has borrowed to the max, the system must crash (which is what is happening now).

Just as the [fundamentalist] priests, stripped of the arcane scriptures and rituals, stand exposed ... so too the economists, stripped of their arcane equations and theories, stand exposed ....

Karthik Athreya doesn't like that fact that the public sees the Federal Reserve for what it really is.

Politica for Dummies: banche, governi e signoraggio

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Torna Politica for Dummies: banche, governi e signoraggio


Torna la categoria ‘Politica for Dummies’con un post dedicato alle banche e al concetto di signoraggio. Partiamo quindi con un esempio concreto e quanto mai reale.

L’altro giorno un collega mi ha raccontato una storia assurda ma che purtroppo, rappresenta la quotidianità e spiega chiaramente come ci siamo venuti a trovare nella situazione attuale di crisi generale. Il collega in questione deve effettuare alcune ristrutturazioni e considerato l’approssimarsi delle ferie desidera mantenere della liquidità.

Non si parla di grosse cifre, poche migliaia di euro di cui comunque disporrebbe sul conto. Si è rivolto al proprio istituto bancario spiegando la situazione e chiedendo la simulazione di un prestito per la cifra in questione. GLI INTERESSI CHE SAREBBERO STATI APPLICATI AMMONTAVANO A 11,26%. Praticamente lui, la stessa cifra, disponendone sul conto, l’aveva di fatto affidata alla banca che la utilizzava regolarmente per soddisfare, tra gli altri, anche finanziamenti e concessioni di prestito come lui stava chiedendo in quel momento. Per la cifra che lui ha ceduto alla banca la stessa gli riconosce un tasso d’interessi ridicolo, che viene abbondantemente dilapidato con le spese di gestione del conto. Sulla stessa cifra invece la banca ricava l’11,26% di utili.

Questo comunque non è ne l’unico ne il principale esempio di come le banche stiano tenendo per le palle governi, nazioni e singoli cittadini. Il principale meccanisco attraverso il quale le banche si arricchiscono all’inverosimile e i governi si vanno a indebitare mettendoni nelle mani degli istituti di credito è il Signoraggio.

Da Wikipedia:
Il signoraggio è l’insieme dei redditi derivante dall’emissione di moneta. Gli economisti intendono per signoraggio i redditi che una banca centrale ed uno stato ottengono grazie alla possibilità di creare base monetaria in condizioni di monopolio. Negli stati moderni, solitamente, una banca centrale stampa le banconote mentre lo stato (ad esempio tramite una zecca) conia le monete, ed entrambi hanno un reddito da signoraggio.

Fondamentalmente il meccanismo del signoraggio si basa sulla differenza tra il valore intrinseco e quello nominale delle singole monete.
In pratica, il costo maggiore è il materiale di cui è composta la moneta, e l’insieme di tutti i vari costi su indicati vanno a determinare il suo VALORE INTRINSECO. La moneta però riporta sulla facciata un numero che indica un altro valore: il VALORE NOMINALE (o, per l’appunto, DI FACCIATA o anche LEGALE). I due valori (intrinseco e nominale) differiscono tra loro e la loro differenza determina quello che si chiama SIGNORAGGIO, ossia il guadagno che ha chi ha creato quella moneta.

Tanto per cambiare, come nel caso dell’esempio iniziale è quasi tutta ‘ciccia’ per la banca. Come se non bastasse e per il fatto di essere ormai tenuti in ostaggio dalle banche, i singoli governi in tempi di crisi cercano attraverso leggi e decreti di sostenere le banche con la condizione che le stesse agevolino l’impresa privata e i cittadini. Peccato che gli stessi governi non siano in condizioni di dettare condizioni alle banche.

Per concludere e chiarire maggiormente la situazione ecco un simpatico ma triste e quanto mai veritiero filmato:

Usura: imprenditore denuncia Banca d'Italia

Usura: imprenditore De Masi denuncia Banca d'Italia

In querela si chiede indagare per vari reati tra cui riciclaggio

29 giugno, 19:16 (ANSA) - PALMI (REGGIO CALABRIA), 29 GIU - Il gruppo imprenditoriale di Nino De Masi ha presentato una denuncia contro Banca d'Italia.

Nella querela, l'imprenditore di Gioia Tauro, che con le sue denunce ha portato ad un'inchiesta della Procura di Palmi sfociata in un processo, ora in appello, contro i vertici di alcune banche nazionali per usura, ipotizza una serie di reati tra i quali l'omessa vigilanza del sistema creditizio, il concorso in usura, in riciclaggio, in falso in bilancio, in appropriazione indebita, in truffa. (ANSA).

Who Will Pay: Wall Street or Main Street ?

Who Will Pay: Wall Street or Main Street , The Tobin Tax or the VAT?

Ellen Brown

Ellen Brown

Huffington Post, June 28, 2010 06:03 PM

Wall Street banks have been saved from bankruptcy by governments that are now going bankrupt themselves; but the banks are not returning the favor. Instead, they are engaged in a class war, insisting that the squeezed middle class be even further squeezed to balance over-stressed government budgets. All the perks are going to Wall Street, while Main Street slips into debt slavery. Wall Street needs to be made to pay its fair share, but how?

The financial reform bill agreed to on June 25 may have carved out some protections for consumers, but for Goldman Sachs and the derivatives lobby, the bill was a clear win, leaving the Wall Street gambling business intact. In a June 25 Newsweek article titled "Financial Reform Makes Biggest Banks Stronger," Michael Hirsh wrote that the bill "effectively anoints the existing banking elite. The bill makes it likely that they will be the future giants of banking as well."

The federal government and Federal Reserve have advanced literally trillions of dollars to save the big Wall Street players, to the point where the government's own credit rating is in jeopardy; but Wall Street has not had to pay for the cleanup. Instead, the states and the citizens have been left to pick up the tab. On June 17, Time featured an article by David von Drehle titled "Inside the Dire Financial State of the States," reporting that most states are now facing persistent budget shortfalls of a sort not seen since the 1930s. Unlike the Wall Street banks, which can borrow at the phenomenally low fed funds rate of 0.2% and plow that money back into speculation, states don't have ready access to credit lines. They have to borrow through bond issues, and many states are so close to bankruptcy that their municipal bond ratings are collapsing. Worse, states are not legally allowed to default. Unlike the federal government, which can go into debt indefinitely, states must balance their budgets; and they cannot issue their own currencies. That puts them in the same position as Greece and other debt-strapped European Union countries, which are forbidden under EU rules either to issue their own currencies or to borrow from their own central banks.

States, of course, don't even have their own state-owned banks, with one exception -- North Dakota. North Dakota is also the only state now sporting a budget surplus, and it has the lowest unemployment and mortgage delinquency rates in the country. As von Drehle observes, "It's a swell time to be North Dakota."


But most states are dealing with serious, chronic defaults, putting them in the same debt trap as Greece: they are being forced to lay off workers, sell public assets, and look for ways to squeeze more taxes out of an already over-taxed populace. And their situation is slated to get worse, since the federal government's stimulus package will soon be cut, along with assistance to the states.

The federal government is not only leaving the states high and dry but is threatening to impose even more taxes on their beleaguered citizens. Paul Volcker, former Federal Reserve Chairman and current White House economic adviser, said in April that Congress needs to consider a Value Added Tax (VAT) - a tax on various stages of production of consumer goods. A VAT of 17.5% is now imposed in Britain, and 20% is being proposed; while some EU countries already have a VAT as high as 25%. In Europe, at least the citizens get something for their money, including federally-funded health care; but that is not likely to happen in the U.S., where even a "public option" in health care is no longer on the agenda. The VAT hits the lower and middle classes particularly hard, since they spend most of their incomes on consumables. The rich, on the other hand, put much of their money into speculative trades, and those sales are not currently taxed.

Business Cycle or Class War?

Ismael Hossein-Zadehi, who teaches economics at Drake University in Iowa, calls the whole economic crisis a class war. What is being billed as public debt began as the private debt of financial speculators who offloaded it onto the public. The governments that bailed out these insolvent speculators then became insolvent themselves; but the bailed-out banks, rather than lending a helping hand in return, have demanded their pound of flesh, with payment in full. The perpetrators are blaming the victims and insisting on "fiscal responsibility." Wall Street bankers are dictating the terms of repayment for debts they themselves incurred.

"Fiscal responsibility" means cutting spending, something that is inherently deflationary during a recession, as seen in the disastrous Depression-era policies of President Herbert Hoover. Not that it was solely a Republican error. In 1937, President Franklin Roosevelt also cut public spending, tipping the economy back into recession. Spending cuts cause tax revenues to shrink, which results in more spending cuts. Contrary to what we have been told, national governments are not like households. They do not have to balance their budgets and "live within their means," because they have the means to increase the money supply. They not only have the means, but they must engage in public spending when the private economy is shrinking, in order to keep the wheels of the economy turning. Virtually all money now originates as bank-created credit or debt; and today the money supply has been shrinking at a rate not seen since the 1930s, because the banking crisis has made credit harder and harder to get.

Instead of "reflating" the collapsed economy, however, national governments are insisting on "fiscal responsibility;" and the responsibility is all being put on the states and the laboring and producing classes. The financial speculators who caused the debacle are largely getting off scott free. They not only pay no tax on the purchase and sale of their "financial products," but they pay very little in the way of income taxes. Goldman Sachs paid an effective income tax rate of only 1% in 2008. Prof Hossein-Zadehi writes:

It is increasingly becoming clear that the working majority around the world face a common enemy: an unproductive financial oligarchy that, like parasites, sucks the economic blood out of the working people, simply by trading and/or betting on claims of ownership. . . . The real question is when the working people and other victims of the unjust debt burden will grasp the gravity of this challenge, and rise to the critical task of breaking free from the shackles of debt and depression.
Working people don't rise to the task because they have been propagandized into believing that "fiscal austerity" is something that needs to be done in order to save their children from an even worse fate. What actually needs to happen in a deflationary collapse is to spend more money into the system, not pull it back out by paying off the federal debt; but the money needs to go into the real economy - into factories, farms, businesses, housing, transportation, sustainable energy systems, health care, education. Instead, the stimulus money has been hijacked, diverted into cleaning up the toxic balance sheets of the financial gamblers who propelled the economy into its perilous dive.

Evening Up the Score

While Congress caters to the banks, the states have been left to fend for themselves. Where is the money to come from to pull off the impossible feat of balancing their budgets? Bleeding a VAT tax out of an already-anemic working class is more likely to kill the patient than to alleviate the disease. A more viable and equitable solution would be to tap into the only major market left on the planet that is not now subject to a sales tax - the "financial products" that are the stock in trade of the robust financial sector itself.

A financial transaction tax on speculative trading is sometimes called a "Tobin tax," after the man who first proposed it, Nobel laureate economist James Tobin. The revenue potential of a Tobin tax is huge. The Bank for International Settlements reported in 2008 that total annual derivatives trades were $1.14 quadrillion (a quadrillion is a thousand trillion). That figure was probably low, since over-the-counter trades are unreported and their magnitude is unknown. A mere 1% tax on $1 quadrillion in trades would generate $10 trillion annually in public funds. That is only for derivatives. There are also stocks, bonds and other financial trades to throw in the mix; and more than half of this trading occurs in the United States.

A Tobin tax would not generate these huge sums year after year, because it would largely kill the computerized high-frequency program trades that now compose 70% of stock market purchases. But that is a worthy end in itself. The sudden, thousand-point drop in the Dow Industrial Average on May 6 showed the world how vulnerable the stock market is to manipulation by these sophisticated market gamblers. The whole high-frequency trading business needs to be stopped, in order to protect legitimate investors using the stock market for the purposes for which it was designed: to raise capital for businesses. As Mark Cuban observed in a May 9 article titled "What Business Is Wall Street In?":

Creating capital for business has to be less than 1pct of the volume on Wall Street in any given period. . . . My 2 cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether it's through a use of taxes on trades, or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for 5 years or more, and no tax on dividends paid to shareholders who have held stock in the company for more than 5 years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won't come from traders trying to hack the financial system for a few pennies per trade.

Besides protecting legitimate savers and investors by exempting stock held five years or more, they could be exempted from a Tobin tax on total stock purchases of under $1 million per year. That would make the tax literally a millionaire's tax -- and a small one at that, at only 1% per trade.

At the G20 summit in Toronto last weekend, a financial transaction tax was discussed and supported by France and Germany but was opposed by the U.S. and Canada, although nothing binding was resolved. However, the states do not have to wait for the federal government or the G20 to act. They could levy a Tobin tax themselves. Objection might be made that the Wall Street speculators would take their revenues and go elsewhere, but big banks and brokerages have branches in every major city in every state. They are hardly likely to pack up their tents and leave lucrative centers of business. Nor can it be argued that we should cater to the pirates who are looting our stock markets because they are paying us a nice bribe, because they aren't even paying a bribe. Financial trades do not currently generate tax revenues.

Two Green Party candidates for governor, Laura Wells in California and Rich Whitney in Illinois, have included a state-imposed Tobin tax in their platforms. Both are also campaigning for state-owned banks in their states, on the model of the Bank of North Dakota. People around the world look to the United States for boldness and innovation, and California and Illinois are two of the hardest hit states in the nation. If those states manage to turn their economies around, they could establish a model for economic sovereignty globally.

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