Trickle Down Tyranny (14 page)

The large banks and brokerages like Goldman Sachs call the financial shots around the world, taking risks that banks weren’t allowed to think about only a little more than a decade ago, and when they lose, American taxpayers are on the hook to bail them out, thanks to the crony capitalist in the White House.

The Goldman Sachs Revolution

Over the past several decades, I’ve watched banking giant Goldman Sachs develop the strategy that is now being played out as the international economy comes more and more under the control of a small group of giant financial institutions. The instigator was former GS CEO Robert Rubin.

When Rubin left Goldman Sachs in the mid-1990s to join the Clinton administration, becoming Treasury Secretary in 1995, he began a parade of GS executives through the cabinets of American presidents that’s still happening. Virtually all the key players on the Obama economic team are former Goldman Sachs employees or sympathizers, and many of them, including Treasury Secretary Timothy Geithner, former senior economic adviser Lawrence Summers, and former budget director Peter Orszag, were mentored by Rubin himself.

The
Times
of London has named this unholy triumvirate the “Robert Rubin Memorial All Stars.”
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After he left the Clinton administration, Rubin, as chairman of another banking giant, Citigroup, brought the Ponzi scheme that he had begun to set up during his tenure as Treasury secretary to the private sector. It’s become the model for the one Goldman Sachs, along with the Bilderberg Group, the IMF, and the Council on Foreign Relations, is now implementing on a global scale. In 2008, a lawsuit was filed against Rubin for defrauding Citibank shareholders of some $122 billion, an amount greater than twice that of now-jailed Ponzi schemer Bernie Madoff.
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Another Goldman Sachs alum, Jon Corzine, pulled the same kind of scheme on his investors. Corzine, after he left as chairman of Goldman Sachs in 1999, was a U.S. senator from New Jersey before he became the state’s governor in 2006. He fleeced New Jersey taxpayers and lined the pockets of his union cronies until Chris Christie unseated him in 2009. After he was ousted from the New Jersey governor’s office, Corzine went back into the financial services business, heading up a company called MF Global Inc., a company specializing in futures trading.

Less than two years after Corzine took the helm, the company filed for bankruptcy after misappropriating customers’ money and using it to make $6.3 billion in bets on European bonds. As a result of the turmoil in the Eurozone sovereign bonds—the same ones I’ve just told you will be the basis of the next crash—the company was downgraded by credit rating agencies to “junk” status. In the process, it was discovered by “regulators”—the same people who could have prevented the debacle if they’d kept a closer watch on the company and its CEO in the first place—that MF Global had violated a cardinal investment industry rule: They failed to “segregate” their clients’ money from the company’s own cash. Somewhere in the neighborhood of $1.2 billion in clients’ money is missing and unaccounted for.
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More than 1,000 MF Global employees were summarily fired. Corzine resigned in the midst of the growing scandal, then hired Andrew Levander, an attorney who specializes in defending those accused of committing the same kinds of white-collar crimes Corzine is accused of.

Corzine was only one in a long line of crooks who shuttled back and forth between government and the financial industry using what they’d learned at Goldman Sachs.

But whereas Madoff and Corzine focused on fleecing individual investors, Rubin developed the model for the institutional rip-off. What we’re currently witnessing in the international financial markets is Rubin’s model put into practice on a global scale.

Here’s how it works.

The current “debt crisis” is a central part of the scheme. The U.S. Treasury continues to print money and sell Treasury bonds in order to finance government spending and disguise the extent of the potential damage from the near-worthless debt obligations the government and big banks still maintain on their balance sheets.

The people on the hook for this debt?

The American taxpayers.

The same people they’ve been fleecing since Obama took office.

I see it as the perfect setup: a captive group of investors at the mercy of a ruthless and desperate government financial power elite abetted by politicians who are unwilling or unable to see what’s taking place before their very eyes.

The financial industry power players control the action.

The Goldman Sachs/U.S. government Ponzi scheme is carried on at a very high level. For starters, Treasury Secretary Geithner has the entire U.S. GDP and the “full faith and credit of the United States” at his disposal. What he and his Obama administration cohorts, along with their Wall Street cronies, are trying to engineer is in every way the same fraudulent scheme that Bernie Madoff and Robert Rubin pulled off against their investors.

In this case, though, it’s American taxpayers who are the “investors” being scammed, and we don’t have a choice in the matter. If we don’t pay our taxes, we’ll be prosecuted to the full extent of the law.

It’s a con man’s dream.

There are others involved in this conspiracy.

In
Trickle Up Poverty
I explained how the Bilderberg Group, a cadre of international power players, has been designing a strategy to take over the world economy, creating a two-tiered class system consisting of “elites” and everybody else. You and I are in the second group, and if the Bilderbergers have their way we will surrender control of our financial destiny and become beholden to them for everything we need as they move toward creating a world financial system which they dominate. The Council on Foreign Relations (CFR) is, along with the Bilderberg Group, a second key player in the attempt by financial elites to rule the world’s economy.

In 1999, Bill Clinton—a member of both the CFR and the Bilderberg Group—along with his Treasury secretary, Robert Rubin—a member of both groups and a former Goldman Sachs CEO—pushed through the passage of the Gramm-Leach-Bliley bill, also known as the Financial Services Modernization Act of 1999. Gramm-Leach paved the way for the current economic crisis by repealing the Glass-Steagall Act.

Glass-Steagall had been passed in 1933 in order to spur our recovery from the Great Depression. The law required the separation of commercial banking operations from investment banking in America’s financial institutions. Prior to Glass-Steagall, banks were permitted to loan money as well as to invest it and broker investments for their clients. That led to their being dangerously overleveraged and to one of the most disastrous effects of the stock market crash of 1929: the failure of American banks.

By 1933, four years after the Great Crash, nearly half of the more than 25,000 U.S. banks had failed. Americans’ savings disappeared.
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Prior to Glass-Steagall, banks had been essentially unregulated, and they were allowed to engage in both commercial and investment banking activities. Glass-Steagall separated commercial and investment banking functions, making it illegal for commercial banks to also operate as investment banks.

The Clinton/Rubin/Goldman Sachs repeal of Glass-Steagall opened the way for commercial banks to once again get into the investment banking business. It also opened the door for Goldman Sachs to position itself as the most powerful player in the world economy, to the point where they control everything from the TARP bailout and the taxpayer-funded stimulus money to the terms of the long-term Treasury bonds that countries use to finance their sovereign debt.

After Clinton and Rubin engineered the repeal of Glass-Steagall and the distinction between commercial and investment banks disappeared once again, the stage was set for the crash of 2008 that got Obama elected.

The difference between the Great Crash of 1929 and the crash of 2008, which gave us current economic downturn, is that the 2008 meltdown was intentional.

We’re now experiencing the second stage of that crash: the creation of an international financial power elite that is determined to control the world’s economic activity and subjugate the people of this planet.

Because of the repeal of the Glass-Steagall Act, and because banks are now permitted to engage in high-risk brokerage activities, including selling insurance and underwriting securities, they’re hedging their risk through such strategies as short-selling and continuing to develop and trade extremely risky financial derivatives.

Let me put it another way: We’re being set up for an economic meltdown similar to the one that triggered the Great Depression, but this time it’s going to occur on a global scale and it’s unlikely that we’ll be able to recover within even the next several decades.

Dodd-Frank: Aiding and Abetting the Enemy

With Glass-Steagall out of the way, new horizons opened up for the financial behemoths who sought to rule the global economy.

First, they had to get one of their own into the presidency.

I was one of the first to explain how they did it.

The repeal of Glass-Steagall enabled banks to engage in trading high-risk derivatives in order to hedge their exposure in the mortgage market, and the losses they racked up caused the financial crisis that ushered Obama into the White House. In order to prevent a repeat of the same scenario, Congress enacted the Wall Street Reform and Consumer Protection Act.
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The legislation is presumably written to prevent future government bailouts of too-big-to-fail financial institutions.

Don’t believe it.

That legislation—also known as the Dodd-Frank bill, after its sponsors, Connecticut Democratic senator Chris Dodd and Massachusetts Democratic congressman Barney Frank—was supposed to restore regulation to the financial industry in the wake of the 2008 crash.

The problem with the legislation starts with the bill’s sponsors.

Chris Dodd is a member of the Bilderberg Group. He’s also a member of the Council on Foreign Relations. Barney Frank is a member of the CFR. Which means these two are just the people the international financial elite were looking for to rubber-stamp their global financial takeover by removing any serious regulatory power from the legislation that was supposed to rein in the big banks.

Dodd-Frank does almost nothing to prevent another financial meltdown from happening. It waters down the separation of commercial and investment banking functions to such an extent that a repeat of the 2008 debacle is happening again before our eyes.

Although banks do face limits on how much of their capital they can invest in hedge funds or private equity funds (three percent), the bill allows banks to continue to engage in derivatives trading, requiring them to spin off only the riskiest of these trades. And the language of the 2,000-page bill is murky enough that banks will still be able to engage in trading derivatives tied to interest rate swaps. They’re also allowed to continue to act as hedge funds for themselves, trading such assets as commodities and credit derivatives in order to minimize their risk.
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The Dodd-Frank bill was supposed to be about eliminating risky trading and requiring banks to manage their affairs responsibly and to bear the responsibility if they don’t do so.

In other words, there would presumably be no too-big-to-fail banks under Dodd-Frank.

As I see it, Chris Dodd and Barney Frank did nothing to change things. All of the major banks are still too big to fail, they’re still putting their clients’ money at risk because they can still engage in hedging their positions, and you and I are still on the hook for their losses.

But don’t just take my word for it. Here’s what Neil Barofsky, formerly the TARP Inspector General, charged with overseeing how the bailout funds are managed, has to say about it:

The continued existence of institutions that are “too big to fail”—an undeniable byproduct of former Secretary [Henry] Paulson and Secretary [Tim] Geithner’s use of TARP to assure the markets that during a time of crisis that they would not let such institutions fail—is a recipe for disaster. These institutions and their leaders are incentivized to engage in precisely the sort of behavior that could trigger the next financial crisis, thus perpetuating a doomsday cycle of booms, busts, and bailouts.
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Tyranny of Fiat Money

You may not know it, but the money you spend to pay your mortgage and buy food for your family and gas for the car might as well be counterfeit.

When Richard Nixon took us off the gold standard in 1971, he ushered in the era of counterfeit money.

Economists don’t use the term
counterfeit
. They call it “fiat currency.”

Same thing.

Fiat money is currency that is not backed by a resource such as gold but that is valued based on its relative scarcity and on the faith the people have in the currency. Unlike money tied to a resource such as gold, there is no limit on the amount of fiat currency that can be created.
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Fiat currency is the basis of the financial manipulation bordering on fraud that the current administration is engaged in.

Thanks to a U.S. dollar that has no anchor in gold, combined with a Fed under Goldman Sachs alumnus Ben Bernanke and a Treasury Department run by Tim Geithner, another GS crony willing to do anything to keep American oligarchs’ financial heads above water and their pockets lined, there is no limit to the lengths the Obama administration will go to perpetuate that financial chicanery.