Monday, July 30, 2012

IF YOU REALLY WANT TO TRULY UNDERSTAND TODAY'S ECONOMICS, STAY AWAY FROM OBSOLETE TEXT BOOKS AND TURN TO THE FEW "OUTSIDE-THE-BOX ECONOMISTS WHO ARE ADDRESSING REAL ISSUES." PAUL CRAIG ROBERTS LISTS THEM FOR YOU HERE.



Escape From Economics



Readers ask me from time to time to recommend a book from which they can learn about economics.

The problem with reading a book to learn economics that is taught in the universities and practiced in Washington is that economics is now a highly formalized subject based on abstract models and assumptions and has been mathematized. It is not that the subject is totally useless and without any applicability to real world problems. Rather, the problem is that the discipline both lags an ever-changing world and got some things wrong at the beginning. Consequently, learning economics places one inside a box where some of the tools and understanding provided are outdated and incorrect.

For example, every textbook will draw a picture of agriculture as the perfect example of competitive markets in which “no producer’s output is large enough to affect price.” This made sense when one-third of the US work force was on family farms. Today, American agriculture is dominated by corporations and agribusiness. Additionally, part of the disastrous financial deregulation pushed by no-think economists and special interests was the removal of position limits on speculators. Formerly, speculators smoothed agricultural and commodity markets by buying and selling in order to stabilize price over periods when supply and demand were out of balance. Now speculators can dominate markets and rig prices to the benefit of their profits.

There are many such examples where economics no longer speaks to the real world.

Two other examples will suffice:

Most intelligent people are aware that natural resources are finite, including the environment’s ability to absorb the wastes or pollution from productive activities (see for example, Jared Diamond, Collapse, 2005). But few economists are aware, because economists assume that man-made capital is a perfect substitute for nature’s capital. This assumption implies that there are no finite environmental limits to infinite economic growth. Lost in such a make-believe world, economists neglect the full cost of production and cannot tell if the value of the increases in GDP are greater or less than the full cost of producing it.

Economists have almost universally confused jobs offshoring with free trade. Economists have even managed to produce “studies” purporting to show that a domestic economy is benefitted by being turned into the GDP of some other country. Economists have managed to make this statement even while its absurdity is obvious to what remains of the US manufacturing, industrial, and professional skilled (software engineers, for example) workforce and to the cities and states whose tax bases have been devastated by the movement offshore of US jobs.

The few economists who have the intelligence to recognize that jobs offshoring is the antithesis of free trade are dismissed as “protectionists.” Economists are so dogmatic about free trade that they have even constructed a folk myth that the rise of the US economy was based on free trade. As Michael Hudson, an economist able to think outside the box has proven, there is not a scrap of evidence in behalf of this folk myth (see America’s Protectionist Takeoff 1815-1914).

My advice to readers who wish to develop economic comprehension is to begin with the outside-the-box economists who are addressing real issues. For example, Herman E. Daly and John B. Cobb’s For the Common Good is accessible to ordinary readers willing to take the effort to google the definitions of unfamiliar terms. However, the most important development in trade theory is not. Global Trade and Conflicting National Interests by Ralplh E. Gomory and William J. Baumol (MIT Press, 2000) is apparently even over the heads of professional economists, who prefer to babble on ignorantly about the “benefits of free trade” than to learn what they don’t know. Nevertheless, readers should understand that the case for free trade will never been the same after
its dissection by Gomory and Baumol.

With this preface to the column, I now turn to its subject: economist Michael Hudson. Hudson is totally outside the matrix in which economists imprison themselves. Hudson doesn’t live in the artificial reality of economists or shill for corporations and Wall Street.

A person can learn a lot from Hudson. His book, Trade, Development and Foreign Debt (2009) explains how foreign trade and economic development have been used to concentrate economic power in the hands of dominant nations. What is really going on is covered up with do-good verbiage and formal models. In reality, trade and development are ways to colonize countries that think they are independent. (Another good book on this subject is Michel Chossudovsky’s The Globalization of Poverty.)

Perhaps the best place to begin with Hudson is his latest book, The Bubble and Beyond, which should be available within a few days of the appearance of this column. In this book Hudson addresses the crisis in the economy and the crisis in the discipline of economics. From this book you can understand not only the crisis but also why economists have misdiagnosed the crisis and are applying incorrect remedies.

Hudson shows that a central problem is that economic theory ignores the role of debt in the economy. Economic theory also pretends that economic policy, such as the Federal Reserve’s monetary policy, serves the public’s interest rather than the interests of powerful private interests.

As Lenin and others predicted, industrial capitalism has turned into finance capitalism. Finance capitalism does not finance or create new real investments such as manufacturing facilities. Instead, finance capitalism functions as a rentier. It leverages debt and extracts interest payments (and today taxpayer bailouts for its over-leveraged gambles). Finance capitalism flourishes by converting more and more of society’s resources into payments to itself.

One result is that markets cease to expand and economies cease to grow as austerity is imposed to service the build-up in debt. Austerity pushes economies down as consumption and investment are cut back in order to service debt. Hudson concludes that the result is that bankers now receive the rents (a form of unearned income) that once flowed to the landed aristocracy. Unlike the aristocracy, who were dispossessed of their rents, the bankers have not been.

Hudson knows the history of economic thought and economic history. Reading The Bubble and Beyond lets readers see how economic ideas developed in ways that leave economists unable to perceive the real character of the problems that are challenging them. Trapped in the matrix that they have constructed for themselves, economists are unable to devise solutions.

Hudson writes that western economies are at a turning point. GDP growth consists increasingly of the build-up of financial overhead. The wealth gains are paper gains, not gains from real plant and equipment, and are increasingly concentrated in the hands of the one percent. Financial earnings are extracted from the earnings of tangible capital and labor. Matt Taibbi captured the point with his imagery of Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

My suggestion is that you read Hudson along with Taibbi’s Griftopia, Nomi Prins’ It Takes A Pillage, Gretchen Morgenson and Joshua Rosner’s Reckless Endangerment, and Daly and Cobb’s For the Common Good. Then if you ever do study economics, you will be armored against being ensnared in the matrix that produces economists as shills for finance capitalism, environmental destruction, and the offshoring of the economy.

Everyone always wants a solution. Hudson offers suggestions how to reconstruct the economy in order that it serves the needs of the 99% instead only of the needs of the 1%.

Get busy. Reading these books will do you much greater good than playing video games, watching TV or hanging out in bars. Our country needs a larger informed younger generation to replace the smaller informed older generation.

Note to readers: Accompanying my column today is an article in the guest section by Herman Daly (titled: (Nationalize Money, Not Banks”). For those looking for solutions to the banking crisis, this astute and highly experienced economist tells you what can be done. 




Friday, July 27, 2012

BERNIE SANDERS' STIRRING ADDRESS TO THE SENATE COMMITTEE ON "THE CONSTITUTION, CIVIL RIGHTS, AND HUMAN RIGHTS" HELD LAST TUESDAY


 rsn    (Reader Supported News)                                                             Subscribe to free newsletter

Senator Bernie Sanders is interviewed by a Reuters reporter, 11/28/06. (photo: Reuters)














The Road to Oligarchy

By Bernie Sanders, Reader Supported News
26 July 2012

The Senate Committee on the Judiciary Subcommittee on the Constitution, Civil Rights and Human Rights held a hearing Tuesday on “Taking Back Our Democracy: Responding to Citizens United and the Rise of Super PACs” Here is Sen. Bernie Sanders’ testimony:
r. Chairman, thank you for convening a hearing on the monumentally important issue of “Taking Back Our Democracy.” Unfortunately, that title exactly describes the challenge facing us today.

      The history of this country has been the drive toward a more and more inclusive democracy—a democracy which would fulfill Abraham Lincoln’s beautiful phraseology at Gettysburg in which he described America as a nation “of the people by the people for the people.”

      We all know American democracy has not always lived up to this ideal. When this country was founded, only white male property owners over age 21 could vote. But people fought to change that and we became a more inclusive democracy.  After the Civil War, we amended the Constitution to allow non-white men to vote. We became a more inclusive democracy.  In 1920, after years of struggle and against enormous opposition, we finally ratified the 19th Amendment, guaranteeing women the right to vote. We became a more inclusive democracy.

      In 1965, under the leadership of Martin Luther King, Jr. and others, the great civil rights movement finally succeeded in outlawing racism at the ballot box and LBJ signed the Voting Rights Act. We became a more inclusive democracy.

      One year after that, the Supreme Court ruled that the poll tax was unconstitutional, that people could not be denied the right to vote because they were low-income. We became a more inclusive democracy. In 1971, young people throughout the country said; “we are being drafted to go to Vietnam and get killed, but we don’t even have the right to vote.”  The voting age was lowered to 18.  We became a more inclusive democracy.

      The democratic foundations of our country and this movement toward a more inclusive democracy are now facing the most severe attacks, both economically and politically, that we have seen in the modern history of our country.  Tragically, as I say this advisedly, we are well on our way to seeing our great country  move toward an oligarchic form of government – where virtually all economic and political power rest with a handful of very wealthy families. This is a trend we must reverse.

      Economically, the United States today has, by far, the most unequal distribution of wealth and income of any major country on earth and that inequality is worse today in America than at any time since the late 1920s.

      Today, the wealthiest 400 individuals own more wealth than the bottom half of America - 150 million people.

      Today, one family, the Walton family of Wal-Mart fame, with  $89 billion, own more wealth than the bottom 40 percent of America.  One family owns more wealth than the bottom 40 percent.

      Today, the top one percent own 40 percent of all wealth, while the bottom sixty percent owns less than 2 percent.  Incredibly, the bottom 40 percent of all Americans own just 3/10 of one percent of the wealth of the country.

      That is what is going on economically in this country. A handful of billionaires own a significant part of the wealth of America and have enormous control over our economy. What the Supreme Court did in Citizens United is to say to these same billionaires: “You own and control the economy, you own Wall Street, you own the coal companies, you own the oil companies. Now, for a very small percentage of your wealth, we’re going to give you the opportunity to own the United States government.” That is the essence of what Citizens United is all about – and that’s why it must be overturned.

      Let’s be clear. Why should we be surprised that one family, worth $50 billion, is prepared to spend $400 million in this election to protect their interests? That’s a small investment for them and a good investment. But it is not only the Koch brothers.

      There are at least 23 billionaire families who have contributed a minimum of $250,000 each into the political process up to now during this campaign; my guess is that number is really much greater because many of these contributions are made in secret.  In other words, not content to own our economy, the one percent want to own our government as well.

      The constitutional amendment that Congressman Ted Deutch and I have introduced states the following:

·       For-profit corporations are not people, and are not entitled to any rights under the Constitution.

·       For-profit corporations are entities of the states, and are subject to regulation by the legislatures of the states, so long as the regulations do not limit the freedom of the press.

·       For-profit corporations are prohibited from making contributions or expenditures in political campaigns.

·       Congress and the states have the right to regulate and limit all political expenditures and contributions, including those made by a candidate.

      I’m proud to say the American people are making their voices heard on this issue—they are telling us loud and clear it is time to reverse the trend. Six states, including my home state of Vermont, have passed resolutions asking us to pass a constitutional amendment to overturn Citizens United. More than 200 local governments have done the same, including many in Vermont. I’m proud to sponsor one such amendment.  My colleagues here, Mr. Baucus, Mr. Udall, and Ms. Edwards, all have good amendments, and I thank them for their hard work on this issue.

      To read the list of billionaire families donating at least $250,000 to campaigns, click here.

      To read more about Sanders’ Saving American Democracy Amendment, click here.

Tuesday, July 24, 2012

"THE FDA HAS REMOVED ALL LIABILITY FROM VACCINE MANUFACTURERS AND PARTICPATED IN A VAST CONSPIRACY AGAINST HUMANITY BY COVERING UP THE DAMAGE THAT VACCINES CAUSE, BY COVERING UP THE DAMAGE OF GMOS, BY COVERING UP THE DAMAGE THAT PESTICIDES AND HERBICIDES AND IRRADIATION AND ALL OF THE OTHER APPROVED TECHNIQUES THAT THE FDA SO HAPPILY ENDOSES WILL COST." -- RIMA E. LAIBOW, M.D.



WAR ON HEALTH - The FDA's Cult of Tyranny

http://youtu.be/VibVIRsHnI0

Published on Jul 3, 2012 by
Progressive Radio Network presents
A Gary Null Production
WAR ON HEALTH: The FDA's Cult of Tyranny
Introduced by the director (from his speech at the world premiere in New York City, June 15, 2012)

In the near future, American medical practice may change dramatically for the worse. No longer will maximal dose natural supplements—vitamins, natural compounds, and scientifically proven medicinal herbs—be available over the counter in local health and grocery stores. Holistic practice, which relies upon non-prescription natural treatments instead of Big Pharma drugs prescribed life-long, will diminish. American healthcare will be imprisoned, patients will be forced to abide by a single medical paradigm defined by corporate drug and food executives and dictated by a government enforcement agency, the Food and Drug Administration (FDA). This is the bleak scenario if the FDA succeeds in limiting Americans' options to prevent and treat diseases.

'War on Health' is the first documentary detailing and challenging the FDA agenda and its allegiance with the international Codex Alimentarius, which hopes to establish a monolithic food and health regime. Betraying its founding mandate to assure drug, food and chemical safety in the interests of public health, the FDA today is a repressive bureaucracy serving pharmaceutical and agricultural greed and profits. Vaccines, medical devices, prescription drugs are fast tracked at alarming rates through the FDA at the expense of scientific oversight to assure their efficacy and safety. The result is hundreds of thousands premature deaths annually from pharmaceutical drugs, vaccines and medical devices and an epidemic of medical incompetence and fraud sanctioned by federal health officials.

Featuring many pioneering American and European attorneys, physicians, medical researchers and advocates of health freedom, War on Health lifts the veil on FDA's militaristic operations against organic food providers and alternative physicians. The film's conclusion is perfectly clear: the FDA is a tyrannical cult founded upon the denial of sound medical science with little intention to improve the nation's health and prevent disease.

Written and Directed by Gary Null
Produced by Valerie Van Cleve
Associate Producer: Richard Gale
Editor: Richie Williamson
Offline Editing: Valerie Van Cleve, L.A. Jones
Camera Operators: Marcello Coppuchino, Peter Bonilla, David Grier, L.A. Jones
Gregory Jason Russ, Jake Hammer Mesmire, Edson Tanakae, Valerie Van Cleve, Richie Williamson

Sunday, July 22, 2012

THE LIBOR SCANDLE: LAUREN LYSTER INTERVIEWS PAUL CRAIG ROBERTS ON JULY 16TH


Paul C. Roberts on "the REAL LIBOR scandal" and "Bond Market Armageddon!"


http://youtu.be/CLZjwBjqT_s


Published on Jul 16, 2012 by CapitalAccount

Follow us @
http://twitter.com/laurenlyster
http://twitter.com/coveringdelta

THE LIBOR SCANDLE: PAUL CRAIG ROBERTS' VIEWS "IN FULL PERSPECTIVE," JULY 19TH



The Libor Scandal In Full Perspective


July 19, 2012                                                                                                                                                  Original here

The article about the Libor scandal, coauthored with Nomi Prins, received much attention, with Internet repostings, foreign translation, and video interviews. To further clarify the situation, this article brings to the forefront implications that might not be obvious to those without insider experience and knowledge.

The price of Treasury bonds is supported by the Federal Reserve’s large purchases. The Federal Reserve’s purchases are often misread as demand arising from a “flight to quality” due to concern about the EU sovereign debt problem and possible failure of the euro.

Another rationale used to explain the demand for Treasuries despite their negative yield is the “flight to safety.” A 2% yield on a Treasury bond is less of a negative interest rate than the yield of a few basis points on a bank CD, and the US government, unlike banks, can use its central bank to print the money to pay off its debts.

It is possible that some investors purchase Treasuries for these reasons. However, the “safety” and “flight to quality” explanations could not exist if interest rates were rising or were expected to rise. The Federal Reserve prevents the rise in interest rates and decline in bond prices, which normally result from continually issuing new debt in enormous quantities at negative interest rates, by announcing that it has a low interest rate policy and will purchase bonds to keep bond prices high. Without this Fed policy, there could be no flight to safety or quality.

It is the prospect of ever lower interest rates that causes investors to purchase bonds that do not pay a real rate of interest. Bond purchasers make up for the negative interest rate by the rise in price in the bonds caused by the next round of low interest rates. As the Federal Reserve and the banks drive down the interest rate, the issued bonds rise in value, and their purchasers enjoy capital gains.

As the Federal Reserve and the Bank of England are themselves fixing interest rates at historic lows in order to mask the insolvency of their respective banking systems, they naturally do not object that the banks themselves contribute to the success of this policy by fixing the LIbor rate and by selling massive amounts of interest rate swaps, a way of shorting interest rates and driving them down or preventing them from rising.

The lower is Libor, the higher is the price or evaluations of floating-rate debt instruments, such as CDOs, and thus the stronger the banks’ balance sheets appear.

Does this mean that the US and UK financial systems can only be kept afloat by fraud that harms purchasers of interest rate swaps, which include municipalities advised by sellers of interest rate swaps, and those with saving accounts?

The answer is yes, but the Libor scandal is only a small part of the interest rate rigging scandal. The Federal Reserve itself has been rigging interest rates. How else could debt issued in profusion be bearing negative interest rates?

As villainous as they might be, Barclays bank chief executive Bob Diamond, Jamie Dimon of JP Morgan, and Lloyd Blankfein of Goldman Sachs are not the main villains. The main villains are former Treasury Secretary and Goldman Sachs chairman Robert Rubin, who pushed Congress for the repeal of the Glass-Steagall Act, and the sponsors of the Gramm-Leach-Bliley bill, which repealed the Glass-Steagall Act. Glass-Steagall was put in place in 1933 in order to prevent the kind of financial excesses that produced the current ongoing financial crisis.

President Clinton’s Treasury Secretary, Robert Rubin, presented the removal of all constraints on financial chicanery as “financial modernization.” Taking restraints off of banks was part of the hubristic response to “the end of history.” Capitalism had won the struggle with socialism and communism. Vindicated capitalism no longer needed its concessions to social welfare and regulation that capitalism used in order to compete with socialism.

The constraints on capitalism could now be thrown off, because markets were self-regulating as Federal Reserve chairman Alan Greenspan, among many, declared. It was financial deregulation–the repeal of Glass-Steagall, the removal of limits on debt leverage, the absence of regulation of OTC derivatives, the removal of limits on speculative positions in future markets–that caused the ongoing financial crisis. No doubt but that JP Morgan, Goldman Sachs and others were after maximum profits by hook or crook, but their opportunity came from the neoconservative triumphalism of “democratic capitalism’s” historical victory over alternative socio-politico-economic systems.

The ongoing crisis cannot be addressed without restoring the laws and regulations that were repealed and discarded. But putting Humpty-Dumpty back together again is an enormous task full of its own perils.

The financial concentration that deregulation fostered has left us with broken financial institutions that are too big to fail. To understand the fullness of the problem, consider the law suits that are expected to be filed against the banks that fixed the Libor rate by those who were harmed by the fraud. Some are saying that as the fraud was known by the central banks and not reported, that the Federal Reserve and the Bank of England should be indicted for their participation in the fraud.

What follows is not an apology for fraud. It merely describes consequences of holding those responsible accountable.

Imagine the Federal reserve called before Congress or the Department of Justice to answer why it did not report on the fraud perpetrated by private banks, fraud that was supporting the Federal Reserve’s own rigging of interest rates (and the same in the UK.)

The Federal reserve will reply: “So, you want us to let interest rates go up? Are you prepared to come up with the money to bail out the FDIC-insured depositors of JPMorganChase, Bank of America, Citibank, Wells Fargo, etc.? Are you prepared for US Treasury prices to collapse, wiping out bond funds and the remaining wealth in the US and driving up interest rates, making the interest rate on new federal debt necessary to finance the huge budget deficits impossible to pay, and finishing off what is left of the real estate market? Are you prepared to take responsibility, you who deregulated the financial system, for this economic armageddon?

Obviously, the politicians will say NO, continue with the fraud. The harm to people from collapse far exceeds the harm in lost interest from fixing the low interest rates in order to forestall collapse. The Federal Reserve will say that we are doing our best to create profits for the banks that will permit us eventually to unwind the fraud and return to normal. Congress will see no better alternative to this.

But the question remains: How long can the regime of negative interest rates continue while debt explodes upward? Currently, everyone in the US who counts and most who don’t have an interest in holding off armageddon. No one wants to tip over the boat. If the banks are sued for damages and lack the money to pay, the Federal Reserve can create the money for the banks to pay.

If the collapse of the system does not result from scandals, it will come from outside. The dollar is the world reserve currency. This means that the dollar’s exchange value is boosted, despite the dismal economic outlook in the US, by the fact that, as the currency for settling international accounts, there is international demand for the dollar. Country A settles its trade deficit with country B in dollars; country B settles its account with country C in dollars; and so on throughout the countries of the world.

For whatever the reason–perhaps to curtail their accumulation of suspect dollars or to bring Washington’s power to an end–the BRICS countries, Brazil, Russia, India, China, and South Africa, are agreeing to settle their trade between themselves in their own currencies, thus abandoning the use of the dollar.

According to reports, China and Japan have reached agreement to settle their trade between themselves in their own currencies.

The moves away from the dollar as the currency of international transactions means that the dollar’s exchange value will fall as the demand for dollars falls. Whereas the Federal Reserve can create dollars with which to purchase the Treasury’s debt, thus preventing a fall in bond prices, the Federal Reserve cannot prop up the dollar’s exchange value by creating more dollars with which to purchase dollars. Dollars would have to be taken off the foreign exchange market by purchasing them with other currencies, but in order to have these currencies the US would have to be running a trade surplus, not a long-term trade deficit.

In the short-run, the Federal Reserve could arrange currency swap agreements in which foreign central banks swap their currencies for dollars in order to supply the Federal Reserve with currencies with which to soak up dollars. However, only a limited number of swaps could be negotiated before foreign central banks understood that the dollar’s fall in value was not a temporary event that could be propped up with currency swaps.

As the value of the dollar will fall as countries move away from its use as reserve currency, the values of dollar-denominated assets also will fall. The Federal Reserve, even with full cooperation from the banking system employing every fraud technique known, cannot prevent interest rates from rising on debt instruments denominated in a currency whose value is falling.

Think about it this way. A person, fund, or institution owns bonds or any debt instruments carrying a negative rate of interest, but continues to hold the instruments because interest rates, despite the increase in debt, are creeping down, raising bond prices and producing capital gains in the bonds. What happens when the exchange value of the currency in which the debt instruments are denominated falls? Can the price of the bond stay high even though the value of the currency in which the bond is denominated falls?

The drop in the exchange value of the currency hits the bond price in a second way. The price of imports rise, and this pushes up prices. The inflation measures will show higher inflation. How long will people hold debt instruments paying negative interest rates as inflation rises? Perhaps there are historical cases in which bond prices continue to rise indefinitely (or even hold firm) as inflation rises, but I have never heard of them.

As the Federal Reserve can create money, theoretically the Federal Reserve’s prop-up schemes could continue until the Federal Reserve owns all dollar-denominated financial assets. To cover the holes in its own balance sheet, the Federal Reserve could just print more money.

Some suspect that the Federal Reserve, in order to forestall a declining dollar and thus declining prices of dollar-denominated financial instruments, is behind the sales of naked shorts every time demand for physical bullion drives up the price of gold and silver. The short sales–paper sales–cancel the impact on price of the increased demand for bullion.

Some also believe that they see the Federal Reserve’s hand in the stock market. One day stocks fall 200 points. The next day stocks rise 200 points. This up and down pattern has been ongoing for a long time. One possible explanation is that as wary investors sell their equity holdings, the Federal Reserve, or the “plunge protection team,” steps in and buys.

Just as the “terrorist threat” was used to destroy the laws that protect US civil liberty, the financial crisis has resulted in the Federal Reserve moving far outside its charter and normal operating behavior.

To sum up, what has happened is that irresponsible and thoughtless–in fact, ideological–deregulation of the financial sector has caused a financial crisis that can only be managed by fraud. Civil damages might be paid, but to halt the fraud itself would mean the collapse of the financial system. Those in charge of the system would prefer the collapse to come from outside, such as from a collapse in the value of the dollar that could be blamed on foreigners, because an outside cause gives them something to blame other than themselves.


THE LIBOR SCANDLE: ELLEN BROWN'S ANALYSIS OF POSSIBLE CONSEQUENCES, JULY 20TH







Titanic Banks Hit LIBOR Iceberg: Will Lawsuits Sink the Ship?


By Ellen Brown                                                                                                    Original here

At one time, calling the large multinational banks a “cartel” branded you as a conspiracy theorist.   Today the banking giants are being called that and worse, not just in the major media but in court documents intended to prove the allegations as facts.  Charges include racketeering (organized crime under the U.S. Racketeer Influenced and Corrupt Organizations Act or RICO), antitrust violations, wire fraud, bid-rigging, and price-fixing.  Damning charges have already been proven, and major damages and penalties assessed.  Conspiracy theory has become established fact.

In an article in the July 3rd Guardian titled “Private Banks Have Failed – We Need a Public Solution”, Seumas Milne writes of the LIBOR rate-rigging scandal admitted to by Barclays Bank:

It’s already clear that the rate rigging, which depends on collusion, goes far beyond Barclays, and indeed the City of London. This is one of multiple scams that have become endemic in a disastrously deregulated system with inbuilt incentives for cartels to manipulate the core price of finance.
. . . It could of course have happened only in a private-dominated financial sector, and makes a nonsense of the bankrupt free-market ideology that still holds sway in public life.
. . . A crucial part of the explanation is the unmuzzled political and economic power of the City. . . . Finance has usurped democracy.

 

Bid-rigging and Rate-rigging

 

Bid-rigging was the subject of U.S. v. Carollo, Goldberg and Grimm, a ten-year suit in which the U.S. Department of Justice obtained a judgment on May 11 against three GE Capital employees.  Billions of dollars were skimmed from cities all across America by colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion.  Other banks involved in the bidding scheme included Bank of America, JPMorgan Chase, Wells Fargo and UBS.  These banks have already paid a total of $673 million in restitution after agreeing to cooperate in the government’s case.

Hot on the heels of the Carollo decision came the LIBOR scandal, involving collusion to rig the inter-bank interest rate that affects $500 trillion worth of contracts, financial instruments, mortgages and loans.  Barclays Bank admitted to regulators in June that it tried to manipulate LIBOR before and during the financial crisis in 2008.  It said that other banks were doing the same.  Barclays paid $450 million to settle the charges.

The U. S. Commodities Futures Trading Commission said in a press release that Barclays Bank “pervasively” reported fictitious rates rather than actual rates; that it asked other big banks to assist, and helped them to assist; and that Barclays did so “to benefit the Bank’s derivatives trading positions” and “to protect Barclays’ reputation from negative market and media perceptions concerning Barclays’ financial condition.”

After resigning, top executives at Barclays promptly implicated both the Bank of England and the Federal Reserve.  The upshot is that the biggest banks and their protector central banks engaged in conspiracies to manipulate the most important market interest rates globally, along with the exchange rates propping up the U.S. dollar.

CFTC did not charge Barclays with a crime or require restitution to victims.  But Barclays’ activities with the other banks appear to be criminal racketeering under federal RICO statutes, which authorize victims to recover treble damages; and class action RICO suits by victims are expected.

The blow to the banking defendants could be crippling.  RICO laws, which carry treble damages, have taken down the Gambino crime family, the Genovese crime family, Hell’s Angels, and the Latin Kings.

 

The Payoff: Not in Interest But on Interest Rate Swaps

 

Bank defenders say no one was hurt.  Banks make their money from interest on loans, and the rigged rates were actually LOWER than the real rates, REDUCING bank profits.

That may be true for smaller local banks, which do make most of their money from local lending; but these local banks were not among the 16 mega-banks setting LIBOR rates.  Only three of the rate-setting banks were U.S.banks—JPMorgan, Citibank and Bank of America—and they slashed their local lending after the 2008 crisis.  In the following three years, the four largest U.S. banks—BOA, Citi, JPM and Wells Fargo—cut back on small business lending by a full 53 percent. The two largest—BOA and Citi—cut back on local lending by 94 percent and 64 percent, respectively.

Their profits now come largely from derivatives.  Today, 96% of derivatives are held by just four banks—JPM, Citi, BOA and Goldman Sachs—and the LIBOR scam significantly boosted their profits on these bets.  Interest-rate swaps compose fully 82 percent of the derivatives trade.  The Bank for International Settlements reports a notional amount outstanding as of June 2009 of $342 trillion.  JPM—the king of the derivatives game—revealed in February 2012 that it had cleared $1.4 billion in revenue trading interest-rate swaps in 2011, making them one of the bank’s biggest sources of profit.

The losers have been local governments, hospitals, universities and other nonprofits.  For more than a decade, banks and insurance companies convinced them that interest-rate swaps would lower interest rates on bonds sold for public projects such as roads, bridges and schools.

The swaps are complicated and come in various forms; but in the most common form, counterparty A (a city, hospital, etc.) pays a fixed interest rate to counterparty B (the bank), while receiving a floating rate indexed to LIBOR or another reference rate.  The swaps were entered into to insure against a rise in interest rates; but instead, interest rates fell to historically low levels.

Defenders say “a deal is a deal;” the victims are just suffering from buyer’s remorse.  But while that might be a good defense if interest rates had risen or fallen naturally in response to demand, this was a deliberate, manipulated move by the Fed acting to save the banks from their own folly; and the rate-setting banks colluded in that move.  The victims bet against the house, and the house rigged the game.

 

Lawsuits Brewing

 

State and local officials across the country are now meeting to determine their damages from interest rate swaps, which are held by about three-fourths of America’s major cities.  Damages from LIBOR rate-rigging are being investigated by Massachusetts Attorney General Martha Coakley, New York Attorney General Eric Schneiderman, officers at CalPERS (California’s public pension fund, the nation’s largest), and hundreds of hospitals.

One victim that is fighting back is the city of Oakland, California.  On July 3, the Oakland City Council unanimously passed a motion to negotiate a termination without fees or penalties of its interest rate swap with Goldman Sachs.  If Goldman refuses, Oakland will boycott doing future business with the investment bank.  Jane Brunner, who introduced the motion, says ending the agreement could save Oakland $4 million a year, up to a total of $15.57 million—money that could be used for additional city services and school programs.  Thousands of cities and other public agencies hold similar toxic interest rate swaps, so following Oakland’s lead could save taxpayers billions of dollars.

What about suing Goldman directly for damages?  One problem is that Goldman was not one of the 16 banks setting LIBOR rates.  But victims could have a claim for unjust enrichment and restitution, even without proving specific intent:

Unjust enrichment is a legal term denoting a particular type of causative event in which one party is unjustly enriched at the expense of another, and an obligation to make restitution arises, regardless of liability for wrongdoing. . . . [It is a] general equitable principle that a person should not profit at another’s expense and therefore should make restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained.

Goldman was clearly unjustly enriched by the collusion of its banking colleagues and the Fed, and restitution is equitable and proper.

 

RICO Claims on Behalf of Local Banks

 

Not just local governments but local banks are seeking to recover damages for the LIBOR scam.  In May 2012, the Community Bank & Trust of Sheboygan, Wisconsin, filed a RICO lawsuit involving mega-bank manipulation of interest rates, naming Bank of America, JPMorgan Chase, Citigroup, and others.  The suit was filed as a class action to encourage other local, independent banks to join in.  On July 12, the suit was consolidated with three other LIBOR class action suits charging violation of the anti-trust laws.

The Sheboygan bank claims that the LIBOR rigging cost the bank $64,000 in interest income on $8 million in floating-rate loans in 2008.  Multiplied by 7,000 U.S. community banks over 4 years, the damages could be nearly $2 billion just for the community banks.  Trebling that under RICO would be $6 billion.

 

RICO Suits Against Banking Partners of MERS

 

Then there are the MERS lawsuits.  In the State of Louisiana, 30 judges representing 30 parishes are suing 17 colluding banks under RICO, stating that the Mortgage Electronic Registration System (MERS) is a scheme set up to illegally defraud the government of transfer fees, and that mortgages transferred through MERS are illegal.  A number of courts have held that separating the promissory note from the mortgage—which the MERS scheme does—breaks the chain of title and voids the transfer.

Several states have already sued MERS and their bank partners, claiming millions of dollars in unpaid recording fees and other damages.  These claims have been supported by numerous studies, including one asserting that MERS has irreparably damaged title records nationwide and is at the core of the housing crisis.  What distinguishes Louisiana’s lawsuit is that it is being brought under RICO, alleging wire and mail fraud and a scheme to defraud the parishes of their recording fees.

 

Readying the Lifeboats: The Public Bank Solution

 

Trebling the damages in all these suits could sink the banking Titanic.  As Seumas Milne notes in The Guardian:

Tougher regulation or even a full separation of retail from investment banking will not be enough to shift the City into productive investment, or even prevent the kind of corrupt collusion that has now been exposed between Barclays and other banks. . . .
Only if the largest banks are broken up, the part-nationalised outfits turned into genuine public investment banks, and new socially owned and regional banks encouraged can finance be made to work for society, rather than the other way round. Private sector banking has spectacularly failed – and we need a democratic public solution.


If the last quarter century of U.S. banking history proves anything, it is that our private banking system turns malignant and feeds off the public when it is deregulated.  It also shows that a parasitic private banking system will NOT be tamed by regulation, as the banks’ control over the money power always allows them to circumvent the rules.  We the People must transparently own and run the nation’s central and regional banks for the good of the nation, or the system will be abused and run for private power and profit as it so clearly is today, bringing our nation to crisis again and again while enriching the few.

Ellen Brown
Web of Debt
Posted: Friday, 20 July 2012

Friday, July 20, 2012

SENATOR BERNIE SANDERS'S RECENT SENATE-FLOOR SPEECH TELLS US THAT THE TOP 1% NOW OWNS 40% OF ALL WEALTH WHILE THE BOTTOM 60% OF ALL AMERICANS OWN LESS THAN 2%, THAT THE RECESSION WAS CAUSED BY WALL STREET, THAT WALL STREET WAS GIVEN THE LARGEST BAIL OUT IN THE HISTORY OF THE WORLD ($16 TRILLION) YET WALL STREET IS USING THIS MONEY TO CONTINUE THEIR GAMBLING RATHER THAN LOANING SOME OF IT TO SMALL BUSINESSES, THAT BETWEEN 2009 AND 2010 THE TOP 1% CAPTURED 93% OF ALL NEW WEALTH, AND THAT CONGRESS IS NOW CONTEMPLATING BALANCING THE BUDGET BY CUTTING SOCIAL SECURITY, MEDICARE, MEDICAID, AND FOOD STAMPS, AND LAYING OFF TEACHERS, WHEREAS THE THE TAX RATES FOR THE TOP 1% ARE LOWER THAN THEY HAVE BEEN AT ANY TIME SINCE 1929, AND YET THE SUPER-RICH 1% ARE MOVING OUT OF THE COUNTRY TO HIDE THEIR TAXABLE INCOMES.







‘The American People Are Angry,’ Sanders Says



June 27, 2012                                                                                  Permalink

WASHINGTON, June 27 - "The American people are angry," Sen. Bernie Sanders said in a major Senate floor speech today.  They are angry that the middle class is collapsing because of the Wall Street-caused recession, they are angry that unemployment is sky high, that 50 million people lack health insurance, and that working families can't afford college for their kids. Meanwhile, the wealthy and the largest corporations are doing phenomenally well and now billionaires and their congressional friends want to balance the budget on the backs of the elderly, the children, the sick and the poor."

Sanders described an American economy which has more wealth and income inequality than at any time since the 1920s. Today, he said, "the wealthiest 400 individuals own more wealth than the bottom half of America - 150 million people. Today, the six heirs to the Wal-Mart fortune own more wealth than the bottom 30 percent. Today, the top one percent own 40 percent of all wealth, while the bottom sixty percent owns less than 2 percent.  Incredibly, the bottom 40 percent of all Americans own just 0.3 percent of the wealth of the country."

Sanders listed a set of key priorities that includes creating jobs to repair America's crumbling infrastructure, providing health care for all Americans, strengthening Social Security, blocking cuts to Medicare and Medicaid, and making the wealthy and profitable corporations pay their fair share to reduce the deficit.

"Americans want an economy that works for the middle class and working families and not just for the rich," Sanders said. "They want everybody in this country to have health care as a right. They want to protect Social Security, Medicare, and Medicaid. They want to move away from these gross inequalities in income and wealth," Sanders said.

People are furious, the senator added, that Congress provided a $700 billion Wall Street bailout while millions of hard working Americans lost their jobs, their homes and their life's savings as a result of the greed, recklessness and illegal behavior on Wall Street.

"The same politicians who were yelling and screaming about how important and how appropriate it was for our government to bail out the crooks on Wall Street, are nowhere to be heard when it comes to having government help average Americans," Sanders said.

The Supreme Court, Sanders said, has erected a major obstacle to achieving many of those objectives. Its disastrous 2010 ruling in Citizens United and Monday's decision in a case from Montana expanding that ruling has opened the floodgates for the super-rich and profitable corporations spend virtually unlimited sums to influence elections.

"If you're getting bored by just owning coal companies and casinos and manufacturing plants, you now have the opportunity to own the United States government," Sanders said. He cited the Koch brothers with their energy and manufacturing fortune and Las Vegas casino tycoon Sheldon Adelson as examples of wealthy individuals attempting to defeat candidates who are representing working families.

Watch Senator Sanders' full speech below:

Thursday, July 19, 2012

INTEREST RATE SWAPS EXPLAINED: AN INSURANCE CONTRACT ON FLOATING RATE BONDS THAT HAS A CLAUSE LEAVING THE SWAP PURCHASER (MOST COMMONLY MUNICIPALITIES) "SHOVELING OUT MILLIONS OF DOLLARS ON A DECLINE OF LIBOR," WHEREAS THE ISSUING BANK HAS TAKEN ITS PROFIT ON DAY ONE AND THEREFORE CANNOT LOSE. HOWEVER, THE BANK CAN WIN IN OTHER WAYS BY DRIVING LIBOR DOWNWARD ...INCIDENTALLY MAKING ITS INTEREST-RATE-SWAP CLIENTS COLATERAL DAMAGE.


 theREALnews                                                                               Permalink

Interest Rate-Fixing Scandal Swindles Baltimore, Other Municipalities out of Millions of Dollars 

Amidst the financial crisis of 2008 and resultant recession, cities and states around the country lost millions of dollars on investments tied to the London Interbank Offered Rate (Libor). Far from a "free market phenomenon," they say the rate was suppressed by a cartel of some of the world's largest banks, and the city of Baltimore is taking them to court.

Related Story: Baltimore, Big Banks and a Criminal Conspiracy 
Watch full multipart The LIBOR Fraud


More at The Real News

Bio 

Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.

Wednesday, July 18, 2012

THE FOOD AND DRUG ADMINISTRATION -- WHOSE DUTY WE'VE BEEN LED TO BELIEVE IS TO PROTECT US FROM DANGEROUS FOODS AND DRUGS -- ILLEGALLY SPIED ON AND FIRED TOP-KNOTCH DOCTORS WHO DISCOVERED A COLONOSCOPY DEVICE APPROVED BY THE FDA THAT WAS 600 TO 800 TIMES MORE RADIOACTIVE THAN SIMILAR DEVICES THAT ARE MORE EFFECTIVE. THE FDA THEN PLANTED SPYWARE ON THEIR EMPLOYEE'S COMPUTORS AND THOSE OF THEIR CORRESPONDANTS, VIOLOLATING FEDERAL EMPLOYEES RIGHT TO FILE SAFETY ALLEGATIONS CONFIDENTIALLY TO THE OFFICE OF SPECIAL COUNSEL, AND LATER VIOLATING THEIR ATTORNEY-CLIENT PRIVILEGES WHEN THEY SOUGHT LEGAL HELP.







TUESDAY, JULY 17, 2012                                                                                 Original here

Spying on Scientists: How the FDA Monitored Whistleblowers Who Raised Concerns over Radiation



The Food and Drug Administration has been found to have launched a massive surveillance campaign targeting its own scientists for writing letters to journalists, members of Congress and President Obama. The scientists were expressing their concern over the FDA’s approval of medical imaging devices for colonoscopies and mammograms that could endanger patients with high levels of radiation. The covert spying operation led the agency to monitor the scientists’ computers at work and at home, copying emails and thumb drives and even monitoring individual messages line by line as they were being composed in real time. The agency also created an enemies list. We’re joined by the FDA whistleblowers’ attorney, Stephen Kohn, executive director of the National Whistleblowers Center. "For the first time, we now have a glimpse into what domestic surveillance of whistleblowers looks like in this country with the modern technological developments," Kohn says. "The agency [sought] to destroy the reputation of these whistleblowers forever." [ORIGINAL includes rush transcript]

"IT LOOKS AS IF AN OVER-CONFIDENT US GOVERNMENT IS DETERMINED TO HAVE A THREE-FRONT WAR: SYRIA, LEBANON, AND IRAN IN THE MIDDLE EAST, CHINA IN THE FAR EAST, AND RUSSIA IN EUROPE." --PAUL CRAIG ROBERTS



War On All Fronts



The Russian government has finally caught on that its political opposition is being financed by the US taxpayer-funded National Endowment for Democracy and other CIA/State Department fronts in an attempt to subvert the Russian government and install an American puppet state in the geographically largest country on earth, the one country with a nuclear arsenal sufficient to deter Washington’s aggression.

Just as earlier this year Egypt expelled hundreds of people associated with foreign-funded “non-governmental organizations” (NGOs) for “instilling dissent and meddling in domestic policies,” the Russian Duma (parliament) has just passed a law that Putin is expected to sign that requires political organizations that receive foreign funding to register as foreign agents. The law is based on the US law requiring the registration of foreign agents.

Much of the Russian political opposition consists of foreign-paid agents, and once the law passes leading elements of the Russian political opposition will have to sign in with the Russian Ministry of Justice as foreign agents of Washington. The Itar-Tass News Agency reported on July 3 that there are about 1,000 organizations in Russia that are funded from abroad and engaged in political activity. Try to imagine the outcry if the Russians were funding 1,000 organizations in the US engaged in an effort to turn America into a Russian puppet state. (In the US the Russians would find a lot of competition from Israel.)

The Washington-funded Russian political opposition masquerades behind “human rights” and says it works to “open Russia.” What the disloyal and treasonous Washington-funded Russian “political opposition” means by “open Russia” is to open Russia for brainwashing by Western propaganda, to open Russia to economic plunder by the West, and to open Russia to having its domestic and foreign policies determined by Washington.

“Non-governmental organizations” are very governmental. They have played pivotal roles in both financing and running the various “color revolutions” that have established American puppet states in former constituent parts of the Soviet Empire. NGOs have been called “coup d’etat machines,” and they have served Washington well in this role. They are currently working in Venezuela against Chavez.

Of course, Washington is infuriated that its plans for achieving hegemony over a country too dangerous to attack militarily have been derailed by Russia’s awakening, after two decades, to the threat of being politically subverted by Washington-financed NGOs. Washington requires foreign-funded organizations to register as foreign agents (unless they are Israeli funded). However, this fact doesn’t stop Washington from denouncing the new Russian law as “anti-democratic,” “police state,” blah-blah. Caught with its hand in subversion, Washington calls Putin names. The pity is that most of the brainwashed West will fall for Washington’s lies, and we will hear more about “gangster state Russia.”

China is also in Washington’s crosshairs. China’s rapid rise as an economic power is perceived in Washington as a dire threat. China must be contained. Obama’s US Trade Representative has been secretly negotiating for the last 2 or 3 years a Trans Pacific Partnership, whose purpose is to derail China’s natural economic leadership in its own sphere of influence and replace it with Washington’s leadership.

Washington is also pushing to form new military alliances in Asia and to establish new military bases in the Philippines, S. Korea, Thailand, Vietnam, Australia, New Zealand, and elsewhere.
Washington quickly inserted itself into disputes between China and Vietnam and China and the Philippines. Washington aligned with its former Vietnamese enemy in Vietnam’s dispute with China over the resource rich Paracel and Spratly islands and with the Philippines in its dispute with China over the resource rich Scarborough Shoal.

Thus, like England’s interference in the dispute between Poland and National Socialist Germany over the return to Germany of German territories that were given to Poland as World War I booty, Washington sets the stage for war.

China has been cooperative with Washington, because the offshoring of the US economy to China was an important component in China’s unprecedented high rate of economic development. American capitalists got their short-run profits, and China got the capital and technology to build an economy that in another 2 or 3 years will have surpassed the sinking US economy. Jobs offshoring, mistaken for free trade by free market economists, has built China and destroyed America.

Washington’s growing interference in Chinese affairs has convinced China’s government that military countermeasures are required to neutralize Washington’s announced intentions to build its military presence in China’s sphere of influence. Washington’s view is that only Washington, no one else, has a sphere of influence, and Washington’s sphere of influence is the entire world.

On July 14 China’s official news agency, Xinhua, said that Washington was interfering in Chinese affairs and making China’s disputes with Vietnam and the Philippines impossible to resolve.
It looks as if an over-confident US government is determined to have a three-front war: Syria, Lebanon, and Iran in the Middle East, China in the Far East, and Russia in Europe. This would appear to be an ambitious agenda for a government whose military was unable to occupy Iraq after nine years or to defeat the lightly-armed Taliban after eleven years, and whose economy and those of its NATO puppets are in trouble and decline with corresponding rising internal unrest and loss of confidence in political leadership. http://www.spiegel.de/international/world/pew-study-finds-steep-declines-in-faith-in-politicians-and-capitalism-a-844127.html

Tuesday, July 17, 2012

THE U.S. DEPARTMENT OF "JUSTICE" BLACKMAILED BARLEYS BANK THUSLY: PAY THE U.S. A FINE OF $160 MILLION OR FACE PROSECUTION FOR THEIR RIGGING OF THE LIBOR (WHICH JUST HAPPENED TO ROB THEIR CLIENTS OF MANY BILLIONS OF DOLLARS). AGREED, SCREW THE CLIENTS.


 theREALnews                                                                               Permalink

Will Obama Admin. Prosecute the Big Banks for LIBOR Manipulation? 

Michael Greenberger: With Wall St.'s embace of Romney, Obama has nothing to lose prosecuting the big banks for the LIBOR fraud 


More at The Real News

A complete transcript is available at the original.

Bio 

Michael Greenberger is a professor at theUniversity of Maryland School of Law, where he teaches a course entitled "Futures, Options and Derivatives."Professor Greenberger serves as the Technical Advisor to the United Nations Commission of Experts of the President of the UN General Assembly on Reforms of the International Monetary and Financial System. He has recently been named to the International Energy Forum’s Independent Expert Group that provided recommendations for reducing energy price volatility to the IEF’s 12th Ministerial Meeting in March 2010. Professor Greenberger was a partner for more than 20 years in the Washington, D.C. law firm of Shea & Gardner, where he served as lead litigation counsel before courts of law nationwide, including the United States Supreme Court.

Monday, July 16, 2012

NAOMI WOLF: "WE ARE SEEING SYSTEMATIC CORRUPTION IN BANKING -- AND SYSTEMATIC COLLUSION." THE COLLUSION IS BOTH AMONG BANKS AND BETWEEN BANKS AND GOVERNMENT. NO ONE HAS BEEN INDICTED FOR THESE MULTI-TRILLION-DOLLAR CRIMES. HOWEVER, THE U.S. IS PROPOSING NEW WAYS TO PUNISH WHISTLEBLOWERS.












This global financial fraud and its gatekeepers

The media's 'bad apple' thesis no longer works. We're seeing systemic corruption in banking – and systemic collusion



guardian.co.uk,




Protesters outside a Bank of America annual shareholders' meeting in Charlotte, North Carolina.
Photograph: Jason Miczek/Reuters



















Last fall, I argued that the violent reaction to Occupy and other protests around the world had to do with the 1%ers' fear of the rank and file exposing massive fraud if they ever managed get their hands on the books. At that time, I had no evidence of this motivation beyond the fact that financial system reform and increased transparency were at the top of many protesters' list of demands.

But this week presents a sick-making trove of new data that abundantly fills in this hypothesis and confirms this picture. The notion that the entire global financial system is riddled with systemic fraud – and that key players in the gatekeeper roles, both in finance and in government, including regulatory bodies, know it and choose to quietly sustain this reality – is one that would have only recently seemed like the frenzied hypothesis of tinhat-wearers, but this week's headlines make such a conclusion, sadly, inevitable.

The New York Times business section on 12 July shows multiple exposes of systemic fraud throughout banks: banks colluding with other banks in manipulation of interest rates, regulators aware of systemic fraud, and key government officials (at least one banker who became the most key government official) aware of it and colluding as well. Fraud in banks has been understood conventionally and, I would say, messaged as a glitch. As in London Mayor Boris Johnson's full-throated defense of Barclay's leadership last week, bank fraud is portrayed as a case, when it surfaces, of a few "bad apples" gone astray.

In the New York Times business section, we read that the HSBC banking group is being fined up to $1bn, for not preventing money-laundering (a highly profitable activity not to prevent) between 2004 and 2010 – a six years' long "oops". In another article that day, Republican Senator Charles Grassley says of the financial group Peregrine capital: "This is a company that is on top of things." The article goes onto explain that at Peregrine Financial, "regulators discovered about $215m in customer money was missing." Its founder now faces criminal charges. Later, the article mentions that this revelation comes a few months after MF Global "lost" more than $1bn in clients' money.

What is weird is how these reports so consistently describe the activity that led to all this vanishing cash as simple bumbling: "regulators missed the red flag for years." They note that a Peregrine client alerted the firm's primary regulator in 2004 and another raised issues with the regulator five years later – yet "signs of trouble seemingly missed for years", muses the Times headline.

A page later, "Wells Fargo will Settle Mortgage Bias Charges" as that bank agrees to pay $175m in fines resulting from its having – again, very lucratively – charged African-American and Hispanic mortgagees costlier rates on their subprime mortgages than their counterparts who were white and had the same credit scores. Remember, this was a time when "Wall Street firms developed a huge demand for subprime loans that they purchased and bundled into securities for investors, creating financial incentives for lenders to make such loans." So, Wells Fargo was profiting from overcharging minority clients and profiting from products based on the higher-than-average bad loan rate expected. The piece discreetly ends mentioning that a Bank of America lawsuit of $335m and a Sun Trust mortgage settlement of $21m for having engaged is similar kinds of discrimination.

Are all these examples of oversight failure and banking fraud just big ol' mistakes? Are the regulators simply distracted?

The top headline of the day's news sums up why it is not that simple: "Geithner Tried to Curb Bank's Rate Rigging in 2008". The story reports that when Timothy Geithner, at the time he ran the Federal Reserve Bank of New York, learned of "problems" with how interest rates were fixed in London, the financial center at the heart of the Libor Barclays scandal. He let "top British authorities" know of the issues and wrote an email to his counterparts suggesting reforms. Were his actions ethical, or prudent?

A possible interpretation of Geithner's action is that he was "covering his ass", without serious expectation of effecting reform of what he knew to be systemic abuse.

And what, in fact, happened? Barclays kept reporting false rates, seeking to boost its profit. Last month, the bank agreed to pay $450m to US and UK authorities for manipulating the Libor and other key benchmarks, upon which great swaths of the economy depended. This manipulation is alleged in numerous lawsuits to have defrauded thousands of bank clients. So Geithner's "warnings came too late, and his efforts did not stop the illegal activity".

And then what happened? Did Geithner, presumably frustrated that his warnings had gone unheeded, call a press conference? No. He stayed silent, as a practice that now looks as if several major banks also perpetrated, continued.

And then what happened? Tim Geithner became Treasury Secretary. At which point, he still did nothing.

It is very hard, looking at the elaborate edifices of fraud that are emerging across the financial system, to ignore the possibility that this kind of silence – "the willingness to not rock the boat" – is simply rewarded by promotion to ever higher positions, ever greater authority. If you learn that rate-rigging and regulatory failures are systemic, but stay quiet, well, perhaps you have shown that you are genuinely reliable and deserve membership of the club.

Whatever motivated Geithner's silence, or that of the "government official" in the emails to Barclays, this much is obvious: the mainstream media need to drop their narratives of "Gosh, another oversight". The financial sector's corruption must be recognized as systemic.

Meanwhile, Britain is sleepwalking in a march toward total email surveillance, even as the US brings forward new proposals to punish whistleblowers by extending the Espionage Act. In an electronic world, evidence of these crimes lasts forever – if people get their hands on the books. In the Libor case, notably, a major crime has not been greeted by much demand at the top for criminal prosecutions. That asymmetry is one of the insurance policies of power. Another is to crack down on citizens' protest.