Anti-American Bankers

By Simon Johnson.  An edited version of this short post appeared today on the NYT.com’s Room for Debate: “Are Global Banking Rules Anti-American?”

Jamie Dimon claims that the new rules on bank capital “anti-American” because they somehow discriminate against American banks and American bankers.  This framing of the issues is misleading at best.

The term “bank capital” is often poorly explained in the debate on this issue.  It is just a synonym for equity – meaning the amount of a bank’s activities that are financed with shareholder equity, rather than debt.  The advantage of equity is that it is “loss absorbing,” meaning that it takes losses and must be wiped out in full before any losses fall on creditors.

More capital means that a bank is safer, both from the perspective of shareholders and for creditors.  Bankruptcy has become less likely.

But the real need for capital requirements arises from the social costs that a banking crisis can impose.  Switzerland has moved to 20 percent capital requirements because they have two large banks which, if they fail, would cause major damage to the economy.  The British are discussing moving in the same direction – the recent Vickers Commission report regards the Basel capital rules as insufficient for safeguarding public interests.

Bankers get lots of guarantees from the government – some explicit, like deposit insurance; and some implicit, like being Too Big To Fail.  This is downside protection – but only for bank executives and some employees; everyone else in society still suffers when big banks blow themselves up.

If the evidence from our recent deep recession and slow recovery is not enough, look at Europe today.  Big banks have huge debts relative to their equity – Deutsche Bank, for example, has a leverage ratio (assets divided by shareholder equity) around 35 times.  Even small losses on sovereign debt in Europe could wipe out shareholder equity – the capital – of those banks.

Requiring higher capital – more equity relative to debt – in US banks is good for everyone.  If some bankers complain and work hard to overturn these rules, they are the ones being anti-American.

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For more reading on what really is bank capital and why we need higher capital requirements, I strongly recommend this paper by Anat Admati of Stanford University and her colleagues: http://www.gsb.stanford.edu/news/research/Admati.etal.html.  Send the link to anyone you think may be misusing or misunderstanding the terminology.

70 responses to “Anti-American Bankers

  1. It seems to me that Professor Johnson has just pointed out that GREED is bad for everyone, even, ultimately, the greedy.

    Check out http://www.steadystate.org and sign on.

  2. But Prof. Johnson, European sovereign debt is 100% safe. The ECB accepts it as collateral, after all…

  3. The connection between bankers and their anti-Americanism, though we could agree to extend that to anti-people, is made only obliquely in the title of this piece. Professor Johnson, in fact, who needs a demonstration of such fact? We ought to demonstrate, Occupy Wall Street!

    http://multumnonmulta.blogspot.com/2011/09/democracy-is-overrated.html

  4. Bruce E. Woych

    Ambiguity and confidence men go hand in hand with the sgnal to noise crowd of misinformation and misdirection / hence, deception, fraud and corruption in progression. The big leagues from Chicago University and the legacies of insurance taxonomies bring us asymmetrical information (like mushrooms,,,keep them in the dark and feed them “fertilizer” [sic] is appropo here) along with other techniques that either rank ignorance as subordinate or insider lingo as superior. This is a great example of how sophisticated a “pre-emptive” loading of the narrative can impact discussion and national debate.

    Nice Job Simon, and thank you for the link !!!

  5. We should not use the term “anti-American” lightly and should remind ourselves what is truly good about us. This is the most beautiful article about freedom I have ever and I mean ever read. I’m sure it is going virtual:

    http://americaspeaksink.com/2011/09/never-too-old-for-freedom/

  6. These bankers have no allegiance to any nation-state, no idea of the greater good, no loyalty to principles of liberty, only insofar as a perversion of the latter grants license for misdeed, much of which, as we have witnessed, is highly criminal, and problematic for society-at-large.

    No, unfettered by the rule of law, these bankers would operate anywhere the politicians are bought and paid for, and the real prospect of the heat coming down with crushing authority is something both sneered at and laughed about at parties.

    The fact a host country or a host planet may be killed off is also of no concern, as further infiltrations of would-be hosts is always on the event-horizon.

    These people are not normal by most standards of definition. As other commenters on this forum have suggested, quarantine (prison, interplanetary launch vehicles) is the preferred method of overcoming this level of irreversible psychopathy.

  7. @ Woop – nicely stated. I would only add that the bankers’ duplicitous complicit politicos should be quarantined as well.

  8. Yes! Basel bank regulations are un-American (and un-Western World) because by allowing banks to leverage more their capital when earning the risk-adjusted-interest-rate from those perceived as “not-risky” than when earning the same rate from those perceived as “risky”, regulators introduced a silly and unproductive risk-adverseness that is not compatible with a “land of the brave” or a Western World that has developed by taking risks.

    Yes! Basel bank regulations are un-American (and un-Western World) because by allowing banks to leverage their capital immensely more when lending to their “solid” governments than when lending to their small businesses and entrepreneurs, that is stealth communism, absolutely not compatible with “the home of the free” or a Western World.

    Here´s a video that explains a small part of the craziness of our bank regulations, and which discriminate so odiously against those perceived as “risky” but who never ever have caused any bank crisis… in an apolitical red and blue! http://bit.ly/mQIHoi

  9. According to http://www.db.com/en/content/company/facts_and_figures.htm the Core Tier 1 capital ratio of Deutsche Bank was 8.7 % in 2010. Where do you get this 35 times leverage number from?

  10. If Jamie’s thesis is taken to its logical conclusion, we should literally survey every country on the planet for the least restrictive, most business friendly policy and change our laws to be “competitive”. So, if Nonexististan allowed nuclear waste disposal in grade school yards, well we should too since otherwise our nuclear industry is at a “disadvantage”.

    I imagine (ie: straw man) that the same people who think like Jamie, also are against world governing bodies like the U.N. However if you have to tit-for-tat match any rules (or rather lack of), how is that not similarly “giving up your sovereignty”?

    Unfortunately Jamie’s dynamic sort of already exists in terms of states, where states compete to be the “most business friendly” and subsequently there’s a sort of regulatory and tax “race to the bottom”.

  11. @JPO234 “Core Tier 1 capital ratio of Deutsche Bank was 8.7 % in 2010. Where do you get this 35 times leverage number from?”

    Because that Core Tier 1 Capital Ratio is based on risk-weighted assets which for instance, at that time, valued exposure to Greece, Spain and Italy at only 20%… and which in essence means that the regulators, with their arbitrary risk-weights, fooled the whole world… and these same regulators are those in charge of making Basel III… how much lunacy can the world take?

  12. Bruce E. Woych

    “Discriminate against TBTF?”

    http://www.un.org/esa/socdev/egms/docs/2009/cooperatives/eacb.pdf

    Please Read the above link and disseminate this wider picture of the international community.
    Paper is from the United Nations On Cooperatives in a World Crisis;… title:

    EUROPEAN CO-OPERATIVE BANKS IN FINANCIAL AND ECONOMIC TURMOIL (April 2009)
    Of possible Interest (this was a pevious contact in 2009 at the UN)
    contact: h.guider@eurocoopbanks.coop Herve Guider (General Manager)
    EACB secretariat

    This paper indicates that many fundamental banks were solvent and were not involved in irresponsible lending or profit seeking (in fact were seriously coordinated in community interests and were, themselves, healthy prior to the TBTF CASINO finance fiasco). These have suffered directly as a consequence of Big Money Finance and the inelasticity of the so called “liquidity” process of monetary easing against the middle classes and the very assets and material rudiments of infrastructure that becomes growth equity.

    Contrary to the idea that financial (pyramid scheme) giants are instrumental to economic health; these consequences indicate that “wealth engineering” by the financial service sector are a direct financial threat to otherwise healthy and well run infrastructures of responsible Bank Management. This model is a critical measure for assessing American mid-range banking health and survival.

    Perhaps just as important is the fact that ETHICS ACTUALLY DOES EXIST in sound banking under cooperative policies; while aggressive competition in finance not only destroys COMPETITION and seeks exclusivity and private monopoly over markets; destroys customers (GREECE et al), destroys itself (Lehman / Bank of America?) but will also destroy the very sound foundation of socially responsible banking in the process of aggrandizing its own self indulgences. Inevitably it lives in a penthouse and fuels it’s leverage with the fires it starts on the bottom floor!

  13. @ per Kurowski:

    Did you bother to read the reference link from Simon? If you bother to open it you will also find this post in the margin:

    http://www.bloomberg.com/news/2011-09-22/jamie-dimon-is-right-about-basel-wrong-about-new-rules-for-banking-view.html

    A Bloomberg editorial titled: Jamie Dimon Is Right About Basel, Wrong About Bank Rules: View
    By the Editors Sep 21, 2011 8:00 PM ET 46 Comments

    and with simple but concise language of clarity they lead into their position with;

    “Bankers don’t like the new rules that international regulators are drawing up. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., has gone so far as to call them “anti-American,” suggesting that the U.S. break with global regulators and go its own way.

    Dimon is absolutely right, but for the wrong reasons. The new banking rules, known as Basel III, are too weak, not too strong.

    Basel III represents the third attempt in about two decades to address one of the biggest threats to the global economy: The tendency of financial institutions to go bankrupt during bad times. Among other reforms, the rules require banks to finance their activities with more equity (or capital) as opposed to debt. The equity helps guarantee that the bank’s shareholders will absorb any losses, instead of turning to taxpayers for bailouts.”

    In case you didn’t see this line:
    “…The new banking rules, known as Basel III, are too weak, not too strong.”

    By the Editors Sep 21, 2011 8:00 PM ET with 46 Comments

    …and Kurowski, when you finish with all the comments over there you might want to consider the concluding statement drawn by the uncontested “American” Bloomberg editors …which is:

    “The U.S. would do well to follow the U.K.’s example and impose a 20 percent risk-weighted capital requirement for the biggest banks. To make sure they’re not gaming the system, their equity should also exceed 10 percent of total assets. This would be anathema to Dimon and other bankers, but it would prevent them from taking the kinds of risks that can result in big bills for taxpayers and economic misery for millions of families.”

    Perhaps yopu might like to argue directly with them?
    Here’s a helping hand:
    To contact the Bloomberg View editorial board: view@bloomberg.net.

    http://www.bloomberg.com/news/2011-09-22/jamie-dimon-is-right-about-basel-wrong-about-new-rules-for-banking-view.html

  14. http://www.bkconnection.com/prosper-movie/

    Prosperity is not the lust for wealth and power over others; and prosperity is truly All-American !

  15. @Bruce:

    Actually, I think Kurkowski did, 6 days ago. Look at the comments following that Bloomberg piece. Per reiterates his position that it’s the risk-weighting of capital that’s the real problem here. Just take 10% of assets without calculating their risk. Makes it a lot easier, the system more robust, and more fair. And takes the wind out of Moody’s and S&P.

  16. @Bruce E. Woych

    Bruce, you should know by now that what I most argue is not about whether the capital requirements should be 10 or 20 percent, but that, whatever they are, they should be the same for all type of assets, because the market already clears for perceived risks.
    And as for the Bloomberg article when they say:

    “Perverse Incentives: Another argument against Basel is that it creates perverse incentives in the way it calculates capital. Instead of simply dividing a bank’s equity by its total assets, the Basel rules assign each asset a weight that is supposed to correspond to its risk. Government bonds, for example, have a zero weight, as if they had no risk at all. This feature makes them very attractive, and helped turn Europe’s debt problems into a global crisis by encouraging banks to invest heavily in the high- yielding debt issued by Greece and other countries… The risk-weighting system is also far too complex and too easily manipulated to provide a reliable picture of how much capital a bank really has.” …

    Where do you think they got it from? I’ve been bombarding them, and so many others on it, for years… there are though things like journalistic plagiarism.

  17. What could be more American than a Second Great Depression? After it all collapses this time around, I hope we see a return of the separation of investment and depositor banking (reinstatement of 1933 Glass-Steagal). Then we can let capitalism ‘flourish’ without any ratings-tethered bank capital requirements (let the casinos go it actually, instead of just de facto, unregulated). To pay off the bailout costs, a financial transaction tax does seem in order, just so long as it taxes the transactions that have the potential to do damage when they go horribly, horribly wrong. Gradually returning to a tax on wealth (real estate), plus a hefty tax on unearned income, especially short-term (HFT-generated) income would put government funding on a better plane. And while you are at it, socialize medicine instead of just having government funding paying for clinical trials of drugs that enrich big pharma. That ought to fix social security (along with a needs test and a higher income cap).

    I loved the description of the Euro-TARP bailout described in Zerohedge two days ago. It seems a masterful construct designed to eke out another round of inter-entity transaction fees with their concomitant bonuses. Pats on the back for all, a Rolex for each trader, and a nice tennis bracelet for their darling wives…

    http://www.zerohedge.com/news/guest-post-euro-tarp-why-it-will-be-screaming-failure

  18. To JPO234:

    In addition to Per Kurowski’s comment above, a kind of back door calculation would simply divide the total asset figure given in the table you cite by the tier one capital figure.That calculation produces a 39:1 ratio. The total asset figure comprises earning assets at book value, not risk weighted.

    If you adjust for the portion of total assets that includes fixed assets like real estate used in operations and equipment, it’s not too hard to infer a 35:1 ratio between book value of earning assets and tier one capital,

  19. @woop

    same conclusion about *who they are* is arrived at every single time…although I find myself really interested in discovering the fatal flaw in USA that allowed them to get as far as they did – of course it was some perversion of a liberty that self-governing people evolved towards – based on what people actually got up out of bed to do unto others disguised as *virtue* – ala Jim Jones and Jonestown – I think religious freedom was the most abused *liberty*….every belief, in the final analysis, is a *religion*…

    same clean up is needed (separate commercial and investment *banking*)….

    “same as it ever was, same as it ever was…” – what song is that from? :-)

    “….In the beginning there was $$$$, and then came life….”

    More misery for others = More $$$ for ME ME ME

    @Woych – from your info – “This paper indicates that many fundamental banks were solvent and were not involved in irresponsible lending or profit seeking (in fact were seriously coordinated in community interests and were, themselves, healthy prior to the TBTF CASINO finance fiasco). These have suffered directly as a consequence of Big Money Finance and the inelasticity of the so called “liquidity” process of monetary easing against the middle classes and the very assets and material rudiments of infrastructure that becomes growth equity.”

    Really think about this and the spinmeistering….the BOTTOM LINE of even a NORMAL monkey brain concept of *law and order* is that anything that takes what is healthy and subjects the healthy to sadistic brutality until it is *sick* quicker and dies quicker is ancient slave management, no? Make ‘em dig their own grave, otherwise it cuts into your profit margin…?

    It is definitely an opportunity to show mercy (not that a psycho can be expected to understand mercy – he’ll laugh and say the people are stupid) during the sentencing.

    Wall Street’s connection to Main Street is nothing more than a CNN 3-D news transmission – all smoke and mirrors. Sever the connection. Let them exist in a mentally insane institution of CDS swap $$$ or whatever else they wanna play video games with…

    So now what kind of symbolic *currency* is going to be circulated based on the 1000 head of cattle that were REALLY loaded up…?

  20. But since Mr. Simon and Mr. Kwak have so steadfastly ignored this issue, let me take the opportunity to ask them again, whether they agree with that the bank regulators should discriminate against those who are perceived as “risky”, like the small businesses and entrepreneurs, and who are already discriminated against in a quite natural way by the banks, in terms of the higher interest rates they are charged, the lower amounts they are lent, the shorter terms for repayments they are offered, and the more intense scrutiny they are subjected too? Sincerely, is that the American way?

    Also the paper Anat Admati of Stanford University and her colleagues, though it speaks about distortions does not mention the distortion produced when the regulators think themselves capable of being the risk managers of the world and start manipulating with their utterly silly and senseless risk-weights… that is what really distorted the market into the current crisis… what a sad bunch of regulators they are!

  21. @Per – look, they did a great job regulating against the risk that small businesses and entrepreneurs would succeed without the creditors getting the biggest share of someone else’s honest work.

  22. @Annie. Yes, according to some of my calculations the small businesses and entrepreneurs, those risk-weighted 100%, have had and have to pay about an extra 2.7 percent in interests rates to the banks so as to provide these with the same return on capital than those risk-weighted 20%… and almost no one seems bothered by this.

  23. @ Annie: “Once in a Lifetime” is a song by New Wave band Talking Heads (source: Wikipedia).

  24. The flaw, it seems, was really quite simple, Annie: money has triumphed (again) over virtue.

  25. @woop “money has triumphed (again) over virtue”

    Worse, in this case what triumphed was sheer stupidity produced by a petit committee of experts incestuously debating in a non transparent, not accountable, and not contestable splendid isolation… in the mountains of Basel.

  26. @Per – of course no one is bothered by it – it’s a genius way to amass unearned wealth!

    Even the astronomy club has members who do not understand *the economy* in any other way than “…there will always be slaves…”.

    As Woop noted, they got so good at creative financial instruments because they just eat the meal, not prepare it. *Risk* is nothing more than gossip critique at the right moment in time – harvest time. Stick your finger in the 50 pound vat of butter to get a taste and then screw up your nose and say its taste is not worth a year’s worth of work…and here’s “I can’t believe it’s not butter” technology :-) They don’t want the land, they just want to steal ownership of the buildings. Look how architecture and infrastructure stopped advancing – technologically speaking – when the ownership changed hands. HUGE set back for energy independence – slum lording…

  27. @ Per, as true convert to your way-of-thinking, and I extend sincere thanks to you for your patience with me, and for putting up with my slow awakening. :)

    BTW, I could use some of that splendid Swiss isolation……about now.

    Anyhow, I pirated that line, or something akin to it, from the movie “CASABLANCA”, full disclosure here.

    And Annie, you are sure onto something with regard to the slow-down (degradation) of architecture….I looked at some photos the other day taken from my hotel window in Chicago in April of 2010……uninspiring glass tubes with glass….a real let down from the Wrigley Bldg. and some others on the Miracle Mile there.

    Lastly, I hope I’m not sounding like a one-trick pony here…:)

  28. sorry, couldn’t resist – CDS paper backdrop as *water* would be a good remake…

    Hank Paulson’s stick-up note to the taxpayer would not have been possible without the Patriot Act – ..the pre-emptive strike at a nation exhausted from war….

  29. “The advantage of equity is that it is “loss absorbing,” meaning that it takes losses and must be wiped out in full before any losses fall on creditors.”

    Bonds are “loss absorbing” too. I’m not sure why creditors should be sacrosanct – I don’t really care about the creditors per se (though we seem intent to protect them at all costs, and I do mean ALL costs). I don’t think the issue is the fact that creditors might have to take haircuts (why is that any worse than stockholders taking losses on equity? the same amount of money is lost…)

    The issue is the physical and structural disruption to the money supply that occurs due to a large financial institution experiencing bankruptcy, combined with the heavy reliance on ultra short term financing (interbank lending). In other words, who cares about the creditors? I care about the fact that banks suddenly stop making loans, and the failure of one bank can cause other banks to stop making loans as liquidity dries up. THAT’s why everyone watches LIBOR and EURIBOR.

    That’s not to say I’m against increasing capital asset ratios – I’m for it, as you know, just for slightly different reasons.

  30. Same as it ever was.

    “The wise men shall be put to shame, they shall be dismayed and taken; lo, they have rejected the word of the Lord, and what wisdom is in them? Therefore I will give their wives to others and their fields to conquerors, because from the least to the greatest everyone is greedy for unjust gain; from prophet to priest every one deals falsely. They have healed the wound of my people lightly, saying, ‘Peace, peace,’ when there is no peace. Were they ashamed when they committed abomination? No, they were not all ashamed; they did not know how to blush. Therefore they shall fall among the fallen; when I punish them, they shall be overthrown, says the Lord.” Jeremiah 8:9-12

  31. @Anonymous, the only problem I have with “Were they ashamed when they committed abomination? No, they were not all ashamed; they did not know how to blush.” Is that perhaps it should end with “they did not know”.

    If we attribute all to malice, and ignore the role of good old stupidity, we might not be able to correct what we need to correct. For instance we might think it is just a question of getting the right regulators into the Basel Committee, but that will not suffice, because before any new Basel III, what we really need is a completely new Basel Committee II, restructured for transparency, accountability, contestability and complete openness, ready and willing to receive, digest and answer observations from outsiders.

  32. The way I was gobbled up and spit into the war machine, like that lasso that they used in Cowboys and Aliens, and then left completely open to the immigrant criminals who were on the lookout to take out the rest, that is what I find sadistic. As a mater of fact, I consider it EPIC. Every episode of “In Plain SIght” this year was about some primitive gang of *globalists* MURDERING their way into being a *small business owner* in the USA. Seriously, pick yourself up by your bootstraps while 700,000 oars are all rolling over your head…?

    You’re ideology continues to dance away from the moral dimension of wars of choice for commodity booty on a planet with 7 billion people.

    If I thought that my existence as a USA citizen was responsible for this head dive into power-madness, you wouldn’t need an army to convince me to kill myself. Who gets off on so much misery?

    Agree with Per that malice was not at play, but revenge certainly was. Looks like a lot more *revenge* rising up over the horizon….endless, I can’t see the end through my telescope…..

    but that’s good for the weapons biz, so no worries…

  33. education nation – this is from the most censored book on the planet:

    http://urantiabook.org/newbook/papers/p070.htm

    if you’re gonna be stupid, it should be by choice in USA…

  34. Desi Girl - Doing Gods Work

    Time to deport this Johnson who is masquerading as a professor.

    The central argument of Admati’s document (which Johnson repeatedly, incorrectly, refers to as ‘research’) is that Banks should have 30% capital ratio because REITS have been profitable with 30% capital ratios. Of course any 10 year old knows that REIT NOT EQUAL to bank. See the footnote on page 40 of Admati’s tome of garbage.

    I am not sure if Johnson teaches classes as a professor. It is a threat to America that her students are being misled by such academics. On the other hand, for people like myself, maybe it is a good thing that non-Americans are need to keep this country going.

  35. Desi Girl - Doing Gods Work

    nyt.com’s commentary is insulting to any clear thinking American.

    For example, Lynn Stout’s comments say that: “….For all you readers who’d rather be scrubbing your bathtubs, here’s the skinny on banking capital requirements: they help keep banks from failing. They accomplish this by limiting banks’ ability to use leverage (that is, borrowed money)…..”.

    Just like Johnson, Stout seeks to exploit the simpleton American mind by abusing her position as an educator who have no ability to question her comments. She offers no explanation on the difference between 5% Capital, 10% Capital, 20% Capital and 50% Capital.

    Any high-school student of economics will tell you that 50% Capital will make the banking system ultra safe -but the amount of capital tied up will result in the next great depression.

    When educators become bankers, we run into dangerous problems.

    After all, in 2004, you could not even get an interview for a job as a mortgage or CDO structurer without a PhD in a quantative field from an Ivy League school.

  36. Per Kurowski: With all do respect to your steadfast commitment to high end speculation,
    See the Slide Show >>> Insider Trading Scandals

    http://www.economywatch.com/economy-business-and-finance-news/inside-the-mind-of-the-ubs-rogue-trader.30-09.html

    “The gigantic $2.3 billion losses that Union Bank of Switzerland is blaming on a Ghanaian-born “rogue” trader have added power to the elbows of all those who believe that “casino” banking ought to be completely separated from “utility” banking and should never be underwritten by the taxpayer.”

    “… a disturbing picture of what goes on inside investment banks, including the hierarchical pecking orders that places risk managers at the very bottom of the heap.”

    http://www.economywatch.com/economy-business-and-finance-news/inside-the-mind-of-the-ubs-rogue-trader.30-09.html

  37. @ back at/with you Annie:

    Talking Heads “Burning Down the House”
    BVMTValternative

  38. @Bruce E. Woych Come on, what’s $2.3bn, about 4 percent of UBS’s equity, when compared to those several trillion dollars lost by the regulators giving the banks extraordinary incentives to lend or invest in “risk-free” sovereigns like Greece and the triple-A rated securities?

    What do you suggest? That the regulators need to explicitly include a rule that states “bankers and traders, thou shall not commit fraud nor misbehave?”

    This incident just provides a welcome distraction to rogue regulators… don’t let them get away…more than a Basel III what we need is a complete new Basel Committee II.

  39. Annie calling out *god*

    Fine with me – let’s get back to the social engineering *idea* of attracting the best and the brightest from around the world to add to the *diversity* stock of USA, shall we? But not at the flavor du jour level, let’s look at ALL peoples invited in to participate in the dream…

    We’re all among friends here, right?

    Follow the bouncing ball – power (the ruthless authoritarian kind) was invested in the Secretary of the Treasury on a whim ala The Patriot Act. Here’s a question – seeing as how Congress spends so much time and yaddayaddayaddayaddayadda horse trading over a couple of MILLION $$$ going to a city like New Orleans where people hit by extreme weather are standing out in the open, surrounded by rubble, how was it that The Patriot Act was presented as a fait accompli from the ethers within a day or two of the *idea* of it?
    Who wrote it? And why?

    On the cabal’s way out the door, the Secretary of the Treasury hands a stick up note to USA citizens – give me all your $$$ – or else you’ll be unemployed forever and homeless.

    It appears to me that there indeed has been a regime change. We have a Secretary of the Treasury doing *god’s work* backed by a private mercenary army and Supreme Justices with awesome powers of alchemy who turn $$$$ = human speech. cool beans, huh? USA has AWESOME technology…

    The remnant *middle* of fallen empires from around the world have had their spies here forever. So while the new regime was, supposedly, “fighting them over there so that they would not hurt us here”, global *maggot capitalists* set up shops *over here*. And why not? Perfect climate for progress – when a government strips all financial privacy protection from its own citizens, it’s a cinch to meme them with *identity theft* using the same technology weapon as the Secretary of the Treasury uses!

    Presenting the *context* for *education*….

    The mercenary army assisting the poor peon USA soldiers had full *LEGAL* power to throw millions of people into the wood chipper to PAY THEMSELVES, and of course they picked out archetypes to make it easier – especially because so many *middle class* were following the same rules of engagement – PEACEFULLY making our lives less miserable through HONEST WORK.

    Isn’t this the presidential election cycle where War Lord Prince of Blackwater should be throwing his hat in the ring as the republican presidential candidate? How about a *corporation* running for Prez? THAT would be a great way to *educate* We The Stupid about how a *corp* is a person, my friend….!

    People do get *passionate* about values and ideals. 400,000 people engaged in hand to hand combat died during USA civil war over the economic use of slavery post industrial age…

    Mercenaries stripping USA *middle class* bare will NOT be a cause for hand to hand combat war?!

    Gosh, have you found the right drug cocktail to throw in the water to make us *forget*?

  40. From the work of Ellen Brown:

    http://seekingalpha.com/author/ellen-brown/articles

    —————————————————————

    http://seekingalpha.com/article/253557-restoring-economic-sovereignty-the-push-for-state-owned-banks

    —————————————————————————————————–

    http://seekingalpha.com/article/278836-why-qe2-failed-the-money-went-offshore

    Why QE2 Failed: The Money Went Offshore
    ————————————————————————-

    http://seekingalpha.com/article/296812-bear-raiders-the-dark-side-of-short-selling

    Bear Raiders: The Dark Side Of Short Selling
    September 30, 2011
    ——————————————————–
    Big Bank Bailouts Stifled Local Lending

    http://seekingalpha.com/article/277750-big-bank-bailouts-stifled-local-lending

    ————————————————-

    http://publicbankinginstitute.org/state-info.htm.

    ————————————————————————
    ————————————————————————

    http://allianceforajustsociety.org/

  41. for woop:

    http://www.cnbc.com/id/44731569

    like I said – the ones playing by the rules…peacefully making their lives better through honest work…insert the sound of a whip lash here :-)

    they usually plant the one bad apple in the institution to use as an example of *corruption* to fire up their amorphously hate filled base….fraud is used to make what is not corrupt appear corrupt – nothing *personal*, it’s just business…plus, it worked like a charm (pedaphiles?!) in sucking out millions of $$$ from Catholic Church real estate…..

    Can we have a Christie vs. Warren debate about American exceptional-ISM? Northeast *elites* have a stake in the *dream*, right? Lalaland (Hollowood) doesn’t have a cult in place for these times, wild west is wilder than anyone *believed* could be possible thanks to Silicon Valley $$$$, skipping over the skanse heartland *middle economy* that’s the only piece of 10,000 years of civilization standing in a *purist* state and the focus du jour of Wall Street short sellers, deep south is down for the count – too much of THEIR blood and treasure got sucked up and then the knock out punches from extreme weather and gulf oil spill – and now goggle map zooming to mid-atlantic and northeast – the original 13 states…let’s hear mom and dad argue about *education* for the *middle class*…

    Start with this map – where’s waldo?:

    http://en.wikipedia.org/wiki/Arab_Spring

    I may be delusional following God’s *suggestion* to “Love One Another”, but I can still keep one foot on Planet Earth and hear the women whose lives will be short and elbow deep in shit and blood misery the whole time they are alive on the African Continent and elsewhere….

    Love the line from Mad Men about Peggy, “It’s like watching a dog play the piano…”….

    Go figure *women*, huh?

  42. @ Annie, correct. Central Falls, RI, a blue-collar city, is completely, abjectly, bankrupt. Imagine, a teacher in retirement, educating children for 30 yrs in a difficult socio-economic environment, and now FACING notification there isn’t $$$ to meet the defined benefit pension plan payout. Talk about sickening.

    Also, your insight into *fraud* as a device to brand something, is precisely on target…take a look at the UBS trader scandal…..the bank itself is in hock, but manages, through the controlled press, to lay it on a single schmuck. Human ingenuity in pursuit of nefarious ends, all the way.

    My message to you, dear Annie, is don’t let these *bass %&** EVER get to you, the universe requires the constancy of your honesty, and the purity of your wisdom.

  43. @Desi Girl:

    “When educators become bankers, we run into dangerous problems.” I agree. It’s a good thing the current head of the bankers’ bank wasn’t caged in an ivy tower prior to this post. … wait that was his predecessor; and he did a heck of a job!

    Dangerous problems occur when people of too flexible moral standards [from push-over-puppets at best to sociopaths at worst] are put into positions of power irrespective of their previous credentials.

    @Annie: Cheers! :)

  44. I think this article proves that ignorance is bliss.

  45. God’s Work Desi Girl writes: “Time to deport this Johnson who is masquerading as a professor.”

    I guess he fooled the Massachusetts Institute of Technology, which permits Professor Johnson to teach there at the graduate level…..Desi, you’re a bleepin’ riot, I got to hand it to you.

    Just when I THINK your personal-folly-apotheosis is right there for all to see, you further surprise and delight with even more BRILLIANT gems.

    Just so you know…….:)

    Last but not least: Here in Mass, (and globally), MIT is THE powerhouse institution of higher learning, but, you didn’t know that, did you, Desi?

  46. “MIT is THE powerhouse institution of higher learning”

    Great. Just for the record, who in MIT, and when, warned about this financial and bank crisis, that was doomed to happen after Basel II was approved?

  47. WOW! By the comments of several it would be easy for a normal and non-psychotic person to conclude that if the comments from “the several” represent USA in a large sense, conclusion suggests catastrophe for USA.
    Check out the recent David Stockman interview at http://www.chrismartensen.com for a more macro outlook.

  48. @ Per, with your brain-power, and i do not mean this facetiously in the LEAST, you should BE teaching somewhere, my friend, if you aren’t already.

  49. Hi Econ, thanks for the link.

    Stockman seems to be portraying a dismal, if not some form of catastrophic end-game for the banking and monetary system, with over-leveraging at all levels the root cause of dysfunction.

    Absent from his remarks, (I didn’t read the more detailed version of the interview, as my elderly mom awaits my arrival), was mention of his cheerleading of supply-side economics, which has been shown to be a complete bust, as too its’ selling point of “trickle down.” I can’t say on this polite blog what I think trickle down really is.

    Anyway, Stockman does say:

    “Okay, in other words, what I’m saying is if it were done in a proper way as a fiscal transfer put before the democracy to review and vote up or down, it would be voted down overwhelmingly. It would be shouted down.”

    Something akin to this happened just before the TARP, where voter-citizen sentiment was clearly NOT IN FAVOR of bank bail-outs, and it took threats of Armageddon to get the Congress to pass it after two attempts, if memory serves me correctly.

    As far as I can tell, Stockman, Greenspan, and the other tinkerers and high priests always sound like “death bed converts”, precisely when their own machinations have fallen down like a building undergoing controlled demolition, say, an old Las Vegas hotel been razed for a facsimile of “Paris”…LOL

  50. @woop “@ Per, with your brain-power, and i do not mean this facetiously in the LEAST, you should BE teaching somewhere, my friend, if you aren’t already.”

    Thank you for that, but no I am not teaching or getting access to do so.

    As I have often explained, if I had argued that the regulators were 10-15 degrees wrong, I would be acceptable, but, since I am arguing they are 150-180 degrees wrong, I am unacceptable and reduced to a sort of mini-Galileo trying to survive the inquisition. For example, even though, like very few, I protested Basel II while Basel II was being written and while I was an Executive Director at the World Bank (2002-2004), and even left formal written warning statements at the Board about the impending crisis I knew was doomed to happen, I have never been invited back to give a seminar and explain my points of view there, since they naturally feel more comfortable inviting some of the many Monday morning quarterbacks. But, that’s, life c’est la vie, and in many ways I understand them. Nonetheless, sooner or later the truth of what the Basel Committee has done and is doing will be understood.

  51. Per, you are a real truth teller, and that comes with a very high price for the individual telling the truth.

    But some people define integrity, and you, undoubtedly, are one of those people.

    This may not make things any *easier*, but know some of us understand full-well the sacrifice of being up front, unwavering, and unbending.

  52. Woop, sincerely, thank you for that. It helps.

  53. @Per – Switzerland is definitely a “Mouse That Roared” country, imo.

    You should get a copy of that movie (Mouse That Roared). Switzerland got what it wanted – the storage contract – the Alps were hollowed out and life went back to being a smooth running cuckoo clock. So how could such a simplistic nation be expected to be smart enough to be *regulators* of the world?

  54. DEMANDS FOR REGULATION IS ANTI-AMERICAN ?: I GUESS THAT INCLUDES THE DEMANDS OF A LOT OF ANGRY AMERICANS TOO?

    http://www.commondreams.org/headline/2011/10/01-4

    Published on Saturday, October 1, 2011 by ABC News
    ‘Occupy Wall Street’ Protests Spread Across the Country
    by Olivia Katrandjian

    http://www.commondreams.org/headline/2011/10/01-4

    ————————————————————————————————————————-

    http://www.huffingtonpost.com/2011/09/30/occupy-wall-street-protests-new-york_n_989221.html

    Occupy Wall Street: NYPD Arrests 700 Protesters On Brooklyn Bridge
    ———————————————————————————————-

    http://www.commondreams.org/further/2011/09/29-0

    09.29.11 – 4:03 PM
    A Natural Alliance: Unions Join Occupy Wall Street
    ——————————————————————

    http://www.commondreams.org/view/2011/09/30-0

    Published on Friday, September 30, 2011 by TruthDig.com
    #OccupyTogether: The Best Among Us
    by Chris Hedges
    ————————————————————————-

    http://www.commondreams.org/view/2011/09/27-2

    Published on Tuesday, September 27, 2011 by OpenSalon.com
    What the Media Aren’t Telling You About American Protests
    by Lisa Romero

  55. Keith Olbermann Covers Occupy Wall Street Protests Media Blackout
    PlanetEarthAwakens01

    Lawyers back Occupy Wall Street Protesters!
    PlanetEarthAwakens01

    Michael Moore: Occupy Wall Street will only get bigger
    PlanetEarthAwakens01

    Wall Street Mocks Protesters By Drinking Champagne 2011
    StephenHannardADGUK

  56. Bruce E. Woych

    Published on Saturday, October 1, 2011 by Inter Press Service
    Occupy Wall Street: “It Is a Revolution”
    by Christian Papesch

    http://www.commondreams.org/headline/2011/10/01#comment-1945163

  57. The current self-proclaimed *successful* people are rinse, lather, repeating their storyline 24/7 now.

    They are brag-ing about having demolished USA middle class – “…it was a success, why should we be punished for being successful…”?

    That’s the Rethug line we’ll be hearing – to *punish* liars thieves and murderers – war lords and drug lords – for being successful in their all-out NIHILISM – is *wrong*. You can’t punish SUCCESSFUL people…

  58. Bruce E. Woych

    http://topdocumentaryfilms.com/meltdown/ The Secret History of the Global Financial Collapse

    2010 Economics

    “Doc Zone has traveled the world – from Wall Street to Dubai to China – to investigate The Secret History of the Global Financial Collapse. Meltdown is the story of the bankers who crashed the world,…”

    Free Documentary @ link

    http://topdocumentaryfilms.com/meltdown/

  59. Bruce E. Woych

    http://topdocumentaryfilms.com/black-money/

    “In Black Money, Frontline correspondent Lowell Bergman investigates this shadowy side of international business, shedding light on multinational companies that have routinely made secret payments — often referred to as “black money” — to win billions in business. “The thing about black money is you can claim it’s being used for all kinds of things,” the British reporter David Leigh tells Bergman. “You get pots of black money that nobody sees, nobody has to account for, … you can do anything you like with. Mostly what happens with black money is people steal it because they can.”

    Free Documentary @ link

    http://topdocumentaryfilms.com/black-money/

    There are other titles of interest offered…check out the link and explore

  60. general: http://search.aol.com/aol/search?s_it=webmail-hawaii1-standardaol&q=financial%20transaction%20tax (search page for “financial transaction tax”
    ————————————————————————————————————-

    http://www.makefinancework.org/home-english/financial-transaction-tax/

    “Some call it the Robin Hood Tax, others call it the Financial Transaction Tax, others call it a really good idea. This tiny tax could take $400,000,000,000 out of the pockets of the bankers who got rich by crashing the economy and use that money to stop domestic service cuts and help the people who are suffering the most from climate change, and who did the least to cause it. This amazing 0.05% tax also helps stabilize the economy by preventing high speed trading (done mostly by computers all on their own). Help us make this piece of common sense into a common practice.”
    ——————————————————————————————————————————————————————————-

    http://wallstreetpit.com/84790-eu-financial-transaction-tax-is-feasible-and-if-set-right-desirable

    EU’s Financial Transaction Tax is Feasible, and If Set Right, Desirable

    By Avinash Persaud Oct 3, 2011, 9:53 AM

    The ‘Tobin tax’ has once again appeared in the headlines having been proposed by the European Commission and opposed by the US. This column argues that such taxes are more feasible than most think when they are linked to legal enforceability, and that the burden would be disproportionately borne by high-frequency traders that provide liquidity only when the markets don’t really need it.

    “The announcement on Wednesday that the European Commission will propose an EU-wide, 0.1% tax on bond and equity transactions, and 0.01% on derivative transactions between financial firms, to support European countries in crisis, will generate substantial opposition. Cassandras will shout that it is another crazy idea from Europe that will presage financial Armageddon.

    In truth, this tax is more feasible than many would have us think, and like all taxes can be set well or badly and if set well, could bring several benefits.”

  61. @Per

    Getting back to “regulators”, some propagandist named Stephanie Snyder is getting paid to go after “local farmer’s markets” – here’s the pertinent excerpt about how the game is played – they HIRE people who are not competent to do the job as a way to discredit the *regulation*:

    begin quote:
    “Because space is limited and very popular with vendors, the market has exceptionally tough requirements. Farmers wishing to join must complete an application up to 17 pages long, be screened for several months and undergo an on-site examination by market managers regarding the farm’s food safety and sustainability practices concerning soil, crops, water, pests, waste, harvest, storage, energy, labor and sales.

    Managers who conduct these inspections have a general understanding of agriculture and handling guidelines for food safetyfromUSDA and the Food and Drug Administration, but they are not specifically trained, said Dave Stockdale, executive director of the nonprofit Center for Urban Education about Sustainable Agriculture, which has operated the market since 1999.”

    end of quote

    So now they are looking for *scientific evidence* to prove that local farmer’s markets make as many people sick as the BIG industrial farms do – and since that evidence is not available, yet, they are doing the next best thing and creating a FEAR of local produce.

    Hire people who don’t know how to regulate. Use that as proof that regulation is bad.

    Then move on to creating the *perception* that local farmer’s markets are not properly regulated, hence the search for “scientific proof” by a reporter that they COULD be just as bad as industrial food when it comes to releasing tainted food.

    How much do you want to bet that Stephanie is adroit at rationalizing why she need not give the example about the Georgia peanut butter case – the owner finally found a lab that would release the bad peanut butter – FRAUD self-regulates in that it can always manufacture it’s own *data*. Regulators are supposed to know how to spot fraud, right? Or are they just supposed to look the other way?

    Every channel of life maintenance distribution that is still functioning without FRAUD and hasn’t been infiltrated for insider theft, is under attack by the rethug wrecking crew. It’s a total all-out war.

  62. gosh darn it, Annie, you said it…perfectly!

  63. Yes Annie, regulations are no easy thing and of course you need to hire those who know… but if one needs “an application up to 17 pages long, be screened for several months and undergo an on-site examination by market managers regarding the farm’s food safety and sustainability practices concerning soil, crops, water, pests, waste, harvest, storage, energy, labor and sales” just to allocate scarce space “limited and very popular with vendors”…this all sounds to me like just another beautiful example of regulations without a defined purpose that have run amok.

    Someone needs to tell the regulators what is the purpose of their regulations you just cannot leave it up to them to decide that.

  64. @Per – the irony in the story that I posted is that the landlord that rents to the farmer’s is the one asking the farmers to complete the 17 page long application :-)

    Is it kosher?

  65. Well then the farmer is just plain stupid since much of that effort that goes into completing regulations could be put to use to reward him more instead.

  66. Those regulations serve only to frustrate, block, defeat the farmer, kill competition.

    I suspect this comes only by nefarious motive, and devious machination. My track record being correct is nothing short of outstanding.

    Was a period of public comment made available?

    I would bet: no.

    Where else are these tactics practiced, and who or what is paying, and who or what stands to gain with the eradication of local produce farmers, local diary farmers, local poultry providers, etc.

    It’s surprising uniformed thugs aren’t down at the market, stepping on necks, and dragging women around….in betweent arresting little girls wearing snug-fitting green hats.

    Kosher, not in the least, Annie…..did you really expect otherwise? :)

  67. I threw in the “kosher” comment because of the similarity of what defines kosher and a 17 page questionnaire and we might as well throw in elaborate requirements for organic – gee, hope no one was offended…point is, it wasn’t *government*, it was the PRIVATE person who owned the space asking for all this info from the farmer…when so picky about your food, why not *inwest* in land and do it yourself…?

  68. Another way to look at it – with 13 trillion in *savings* that big corps are sitting on, why not chase off people from unpolluted land (Pfizer succeeded in CT, now they’re closing the site due to cutbacks in research, but HOW to get people off of land you want has been established as precedence by the courts for Pfizer) and start growing your special food, set to your picky requirements…? Heck, with 13 trillion you can even hand select young virgin boys and girls to hand pick your fruits and veggies – that should add to the marketing schtick about how special the food is :-) Over time, with 13 trillion, you can even re-write history and assign a person’s name as the inventor of the technology known as a *seed*…

  69. Have anyone of you heard about any university course or degree that specifically tackles the art of regulations?

  70. @Per – Yes, but it is called “How to Get Fired” for not looking the other way when someone is breaking the regs…it’s not even a *concept* anymore – regulation. The elite are off experimenting with cutting and pasting RNA/DNA for paint-by-numbers fun, and who knows where else a fractal bomb gets loaded…?

    “To infinity and beyond!”

    The sooner everyone realizes that they WILL consider the death of 4 billion people to be proof of concept, the better prepared we will be. As far as I am concerned, THEY took the first shot. It’s clear conscious sailing to take the defensive shot – isn’t it? But then who *regulates* war for survival?

    Not impressive and not fair that the billion man breeders in other than “white” races think someone else owes them and their spawn a living….