Greece: Island Of Democracy.

by Jerry Alatalo

DrachmaReading articles on the situation in Greece has led to looking at possible connections between a Citigroup-written Dodd-Frank-rollback provision snuck into the December 2014 “Cromnibus”, must-pass spending bill in the United States Congress – and how Greece ran up its debt. Could it be that Citigroup and other Wall Street megabanks placed huge derivatives bets on Greece continuing to pay its creditors, saw the rise of Syriza in Greece and a strong possibility the party would win the January 2015 Greek election, and that Syriza would fight further austerity to the point of default?

Who knows what top managers at Citigroup were thinking when they arranged for members of the US Congress to insert Citigroup’s derivatives/swaps bailout provision in the spending bill. Maybe the move was specifically in response to political developments in Greece and large “bets” which had the real chance of losing Citigroup and others great sums of money. Maybe the provisions became inserted because of growing awareness by Wall Street of imminent changes in the world’s finance/banking system, and coming monumental losses from losing “bets” on derivatives contracts. No matter the real reasons, some estimates of global derivatives totals include the word quadrillion – one thousand trillion.

What the specific reasons for Citigroup, its lobbyists in Washington, and collaborative (colluding?) members of Congress were for successfully inserting the derivatives provisions can only become known by the American people through asking those individuals responsible for getting it passed into law. At any rate, it’s interesting to go back to December 11, 2014 and listen to Senator Elizabeth Warren, unsuccessfully, try to keep the provision out of the spending bill.

The Citigroup provision passed in December 2014 specifically takes aim at Dodd-Frank legislation having to do with “Prohibition of government bailouts of swaps entities”.

Here’s some of what Senator Warren said before the vote on “Cromnibus” in December 2014:

“If big Wall Street banks want to gamble with their own money and live with the consequences of those risks, that’s how markets are supposed to work. But they shouldn’t get to gamble with government insured money and they shouldn’t get to run up to the government when the deal goes sour”.

“House Republicans are moving quickly to try to jam this bill through today before their own members have had a chance to digest this Wall Street bailout provision”.

Ms. Warren pointed out that a “fact sheet” on the provision was intentionally confusing, written to obfuscate, and designed for diverting attention so to increase the odds of passage.

“A vote for this bill is a vote for future taxpayer bailouts of Wall Street. When the next bailout comes, a lot of people will look back to this vote to see who was responsible for putting the government back on the hook to bail out Wall Street”.

“This fight isn’t about conservatives or liberals; it’s not about Democrats or Republicans. It’s about money and it’s about power right here in Washington. This legal change could trigger more taxpayer bailouts and could ultimately threaten our entire economy, but it will also make a lot of money for Wall Street banks. This change will be a huge boon to just a handful of our biggest banks – Citigroup, JP Morgan, Bank of America…”

“The American people sent us here – Republicans, Democrats and Independents – they sent us here to stand up for them, to stand up for taxpayers, to protect the economy. I urge my Republican colleagues in the House to withhold their support from this package until this risky giveaway is removed from the legislation. It is time for all of us to stand up and fight!”

Members of Congress weren’t convinced by Elizabeth Warren, the Cromnibus spending bill passed along with the Citigroup provision. If Wall Street banks lose big money on derivatives/swaps bets, the American people will become forced to bail them out.

(Thank you to Senator Elizabeth Warren at YouTube)

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That December 2014 event is interesting to consider in contrast to what economist Michael Hudson said recently on the situation in Greece.

“At the G8 meetings in 2011, President Obama went over along with Tim Geithner (then Treasury Secretary) and said ‘our big campaign contributors are on Wall Street, and they’ve made huge bets that Greece could pay’. If Greece doesn’t pay then these gamblers and derivatives players are going to lose their bets. You’ve got to sacrifice Greece, and you’ve got to drive it into poverty, and lend the Greek government the money to pay the bondholders so our Wall Street banks won’t lose money”.

“So the European Central Bank told the International Monetary Fund (IMF), ‘if you want to be a player you’ve got to ignore what the staff said’, and they did. (The IMF staff had determined Greece was unable to pay back more loans) The European Central Bank, the IMF paid over $100 billion euros to the bondholders, so Greece, instead of owing private bondholders, they owed the IMF and European Central Bank. Now the European Central Bank wants to get paid, but the debts can’t be paid”.

“So the European Central Bank says, ‘Ok, Greece. Sell us your islands, sell us your ports, sell us your land, sell us your raw materials… This is foreclosure time, and if you can’t pay we want everything in the public domain. And you also have to impose austerity. You only have a 60% unemployment rate for youth. You’ve got to increase the unemployment rate to 80%, double the emigration, in order for us to make the loans to your government – that will turn right around to pay us!’

“It’s either austerity or we will ‘smash and grab’. Take your pick”.

Bill Black added:

“…Crony capitalism. You can’t keep a country – at least there’s no economically rational basis for doing so, and of course it’s completely inhumane – to keep a country in a condition where it constantly will be in ever-greater debt. And that’s precisely what the Troika wants to do, and as Michael said, German politicians have openly demanded that Greece begins selling islands. In other words, selling the nation. Just a complete disruption of sovereignty”. 

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(Thank you to TheRealNews at YouTube)

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Greece’s Prime Minister Alexis Tsipras was recently quoted as saying:

“My personal view is that their plan is not to push Greece out of the Euro zone. Their plan is to end hope that there can be a different kind of policy in Europe”.

Greece missed the June 30 deadline on its $1.6 billion payment. Has anyone seen those 85 people who own as much wealth as half the world’s population? If anyone does see them, ask them if they could “pass the hat” for the birthplace of democracy. If you think that’s going to happen, I’ve got some islands in Greece to sell you…

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Greece: (Re)Birthplace Of Democracy?

Posted on January 10, 2015

by Jerry Alatalo

aaa-25Alphabet Recent polls in Greece show Syriza as the leading party to win elections in two weeks on January 25. University of Missouri – Kansas City Associate Professor of Economics and Law Bill Black talks about the situation in Greece on The Real News.

Bill Black starts out speaking to a few problems he had with a recent Wall Street Journal article on Greece titled “The Triumph of Austerity”. With Greece economic conditions including unemployment near 25% for the general population and 50-60% for youths, Mr. Black – in contrast to the Wall Street Journal – compares that to the Great Depression, but worse.

Austerity measures are exacerbating negative economic conditions due to the simple fact that average Greeks have less money to spend, hence demand has plummeted, slowing the economy. According to Black, the so-called “Stability and Growth Package” the Greek government has become forced to adhere to by the “Troika” – the European Commission, European Central Bank, International Monetary Fund – has resulted in the exact opposite: instability and decline.

Black compares what has occurred in the belt-tightening steps, which Troika high officials claim will help the Greek economy rebound, to the ancient medical practices used by doctors of old of drawing blood, then, when the patient’s health fails to improve, the doctor prescribes more bloodletting. What has led many to believe Syriza will win the elections coming quickly in a few weeks is the people’s growing opposition to economic and financial “solutions” which offer more of the same highly negative results they’ve experienced for years.

Syriza is the only party in Greece which has said “enough is enough”. While the Wall Street Journal, New York Times and other media groups try to paint a rosy picture of Greece under harsh austerity measures, it seems the men and women of Greece aren’t buying it anymore. All they have to do is look around at their neighbors cutting down trees for firewood, scavenging for food, or without electricity, to understand that Syriza offers a path out of the economic darkness.

When Syriza wins the upcoming elections, the question which analysts are asking the most is whether they’ll take Greece out of the Eurozone or if Greece will remain. Apparently, leader Alexis Tsipras and Syriza party’s current stance on the Eurozone is Greece will remain. Some have suggested the best choice for Greece is to leave the Eurozone and the Euro, set up a state-owned central bank in charge of monetary policy with the return of the drachma (the Greek currency before adopting the Euro), and cutting ties with the Troika. With a state-owned central bank Greeks will have complete control of their monetary system, with the ability to increase or decrease the money supply according to economic conditions and financial indicators.

Perhaps the Greek people will seek to do business with the newest investment/development bank “in town” just started by the BRICS group of nations. If Greece takes the option of leaving the Eurozone, some nations including Spain, Italy, Portugal, Ireland, and other European Union member states may soon reconsider and follow in a domino-style that will transform the EU and the global financial/economic scenario in a way very rarely seen.

Austerity is on trial now in Greece, and, in that nation where democracy was born over twenty centuries ago, the Greek people and the world may well see democracy “born again”.

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(Thank you to therealnews at YouTube)

Economic Crisis’ Cause: Screwiness Or Criminogenics?

English: Brooksley Born
English: Brooksley Born (Photo credit: Wikipedia)

Posted October 23, 2013

by Jerry Alatalo

“Money, money, money, monnn-ney… MON-ey.”  So goes the song by the Motown musical group The O’Jays, “For The Love of Money”, which came to the radios in the 70’s. To be honest, there are times when one wishes money were never created. Can’t Public Banking become implemented now as the new monetary system and replace the old debt-based, private-controlled central banking model? Well, they say patience is a virtue.

In this post we will find a large contrast in views between former Federal Reserve Chairman Alan Greenspan and Law and Economics Professor William K. Black of the University of Kansas City-Missouri. The very obvious contrast points to, in my mind, an intentional effort by those at the highest levels of management at the Federal Reserve to obfuscate or confuse the people.

In the first video (thanks to Kevin @ YouTube) we find Alan Greenspan on October 22 Daily Show with Jon Stewart. Mr. Greenspan”s book “The Map and the Territory” just came out, and he talks with Stewart about “what went wrong” in the events leading up to the 2008 economic crisis. In my opinion Greenspan speaks in a vague, hazy kind of way filled with generalizations.

The first few minutes before Alan Greenspan walks on are about glitches/problems with internet enrollment in the so-called Obamacare program, good for a few laughs.

Mr. Greenspan says “we” didn’t see it coming-that we thought banks would be better stewards of their capital, that they (the bankers) didn’t understand the risks out there. He goes on to say that markets do “weird” things, and that people are sometimes a little “screwy”. He said that we always thought that the “screwiness” would wash out. First, can the former Chairman of the Federal Reserve be any more vague and non-specific than, in effect, blaming the worldwide economic crisis on “screwiness”?

He goes on to “identify” the problem: in 1970 the New York Stock Exchange made some change that allowed broker/dealers to incorporate, which led to risk-taking that would not have occurred if the partnership arrangements were kept as the majority of brokers and dealers’ relationships-equity would have been protected. Mr. Greenspan suggests the easiest thing to do is increase capital requirements because, when banks fail it “rumbles through the system”.

He goes on to say “that those of us who look at that sort of “stuff” (totally lacking specificity) recognize…” He sums it up by saying that if there is enough regulatory capital, “then they can do a lot of things which you shouldn’t be able to…which you shouldn’t worry about.” I am still trying to determine if, when he said “shouldn’t be able to” and “which you shouldn’t worry about”, this was a sort of gaffe. Did Mr. Greenspan start that sentence and almost say “which you shouldn’t be able to do”, thereby admitting that fraud and criminality will continue even with increased capital requirements, his idea of an easy fix? Has retirement dulled his ability to obfuscate and confuse on his feet, where before he never had to stop in mid-sentence and correct himself?

Mr. Greenspan mentions zero, nada, zilch about the frauds and corruption, or his dealings with Brooksley Born, head of the federal regulatory agency overseeing derivatives, and her very urgent call to regulate the multi-trillion dollar, unregulated derivatives trading transactions-which were a major factor in the economic crisis-and which Born’s suggested regulation Greenspan, Larry Summers and others fought and blocked. Find the essential, astonishing Frontline episode “The Warning” which reports on Brooksley Born and her unsuccessful battle to regulate derivatives trading.

Alan Greenspan and Ben Bernanke are “Wizard of Oz” characters, the men behind the black curtain, who have used smoke and mirrors, obscuration, confusing, overly complex economic blather, and banking jargon as they are high-paid managers for the ultra-rich owners of the Federal Reserve Bank.  Ivory Tower economists who don’t mention the “downsizing” and “workforce reductions” which led to millions of American jobs sent to Mexico and China for low-wage workers. They are Ivory Tower economists who assert that Americans aren’t working because “entitlement programs are too generous”, calling on governments around the world to begin “austerity measures” so that their bosses, the owners of privately owned central banks get paid the principal plus interest.

Contrast Alan Greenspan to Bill Black.

In 2011 Bill Black received an invitation to speak before Congress as part of a panel of experts on the issue of derivatives. He accepted the invitation. Shortly before the panel convened and was ready to speak to Congressmen, Mr Black was “disinvited” because, he was made aware in email communication, he was going to “bash banks”, be “confrontational”, and may “cause damage to the reputations of banks”.

Before this he had testified five times, before both Democrat and Republican committees, about fraud, banking and regulatory matters. He has over thirty years of experience in law, white-collar crimes and economics, and led the effort to convict around a thousand savings and loan executives in the bank crisis of the 1980’s. Mr. Black says that the 2008 crisis is the biggest in 75 years, the economies of America and Europe have suffered devastation, and nothing fundamental has changed.

Mr. Greenspan failed to note in his conversation with Jon Stewart, as Mr. Black does here, that millions of fraudulent “liars loans“, 40% of the mortgages made, were largely responsible for the crisis. Bill Black emphasizes that “liars loans” are fraud and they are crimes. Mr. Greenspan must have missed the “liars loans” meetings.

Mr. Black quotes Mr. Greenspan when he spoke to Brooksley Born about her push for the regulation of derivatives, “I don’t think there is any need for laws against fraud. The market will take care of itself”.

So, was the 2008 crisis caused by, as Alan Greenspan put it, “screwiness”, or as Bill Black sees it, “criminogenics”?

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Who Is Carmen Segarra?

Federal Reserve Bank of NY, 33 Liberty Street
Federal Reserve Bank of NY, 33 Liberty Street (Photo credit: Wikipedia)

Posted October 20, 2013

by Jerry Alatalo

For those who have tried to do what they can to expose the historic criminality on Wall Street, Carmen Segarra is, as they say in law enforcement circles, “a person of interest”. Not in the sense that she has come to be seen as a suspect in some sort of crime, but that her case is one that can help the citizens of America and the world learn how the Wall Street operators “operate”.

As the story of Ms. Segarra is relatively new and developing, so far I have not a great deal to say about it. However the most important aspect of her story has to do with regulation of the financial sector-or should I say the lack of regulation. Carmen Segarra was a bank examiner for the New York Federal Reserve and worked on compliance issues as they related to Dodd-Frank laws as well as other financial regulation rules according to laws passed by Congress.

Firstly, we find that in effect the Federal Reserve is a self-regulating institution. This situation is a major league problem for many people, including Bill Black, who was heavily involved in investigations of savings and loan banks in the mid-eighties, which led to hundreds of convictions of high-level managers, as opposed to zero convictions of those responsible for the 2008 financial crisis.

In the short video of Bill Black on The Real News, he comments on Ms. Segarra’s situation, as she discovered some problems at Goldman Sachs with regard to laws on conflict-of-interest specified in Dodd-Frank legislation. As a bank examiner in the area of government law compliance, she submitted a report that was in effect the truth-her honest observations. Evidently she was encouraged by her superiors to change her report, declined to falsify her findings, and was terminated very shortly afterwards.

Thus far details about what Ms. Segarra found at Goldman Sachs relate to problems of conflict-of-interest. One may surmise that she discovered information which proved sales of so-called toxic assets to customers, while being fully aware of the worthlessness of them-placing bets against the complex financial products while claiming to customers that they are “great investments”.

Ms. Segarra received training as a lawyer and filed a wrongful termination suit against the New York Branch of the Federal Reserve. She claims in effect that she was fired for doing her job. Since she filed her lawsuit the New York Fed has attempted to “seal” certain documents she has in her possession, including internal emails, as the Fed claims she was in the wrong for taking documents which are the property of her former employer. I have seen only one interview of Ms. Segarra on the Spanish TV channel Univision Noticias. Unfortunately at this point no English interviews of her are available.

It would seem that the story of Carmen Segarra is one that journalists say, “has legs”, and may become a very large story the likes of Bradley Manning and Edward Snowden. As her story unfolds and becomes learned about by the American people and men and women around the Earth, what is uncovered may lead to very significant levels of concern and demands for a variety of reforms. As deregulation is widely accepted as the major cause leading to fraud, corruption and impunity in the years leading up to 2008’s worldwide financial catastrophe, Carmen Segarra may soon become a household name.

(After posting this-Special thanks to Ian @ Ace News Services for providing the following link to an absolutely astounding article @ ProPublica regarding Carmen Segarra)

http://www.propublica.org/article/ny-fed-fired-examiner-who-took-on-goldman

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(Update September 28, 2014: The following link will take you to a radio broadcast about Carmen Segarra’s explosive “Secret Tapes” at This American Life.

http://m.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra

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To any readers who have thoughts to add surrounding the true importance of Carmen Segarra’s story, her situation, and her lawsuit against the Federal Reserve, please do not hesitate to share them in the comments section below.