Trends forecaster Gerald Celente of Trends Journal speaks with Die MetallWoche and throws out some real zingers as he discusses the historical comparisons of today’s world to the World War I era and declares that “destruction” is being put in place by “maniacs in charge.”
Here we go again. Another round of the game we call Congressional Creep. After months of haggling and debate, Congress finally passes reform legislation to fix a serious rupture in the body politic, and the President signs it into law. But the fight’s just begun, because the special interests immediately set out to win back what they lost when the reform became law.
They spread money like manure on the campaign trails of key members of Congress. They unleash hordes of lobbyists on Capitol Hill, cozy up to columnists and editorial writers, spend millions on lawyers who relentlessly pick at the law, trying to rewrite or water down the regulations required for enforcement. Before you know it, what once was an attempt at genuine reform creeps back toward business as usual.
It’s happening right now with the Dodd-Frank Wall Street Reform and Consumer Protection Act — passed two years ago in the wake of our disastrous financial meltdown. Just last week, for example, both parties in the House overwhelmingly approved two bills that already would change Dodd-Frank’s rules on derivatives — those convoluted trading deals recently described by the chairman of the Commodity Futures Trading Commission as “the largest dark pool in our financial markets.”
Especially vulnerable is a key provision of Dodd-Frank known as the Volcker Rule, so named by President Obama after the former Federal Reserve Chairman Paul Volcker. It’s an attempt to keep the banks in which you deposit your money from gambling your savings on the bank’s own, sometime risky investments.
It will come as no surprise that the financial sector hates the Volcker Rule and is fighting back hard.
That Lawrence Summers, a president emeritus of Harvard, is a consummate distorter of fact and logic is not a revelation. That he and Bill Clinton, the president he served as treasury secretary, can still get away with disclaiming responsibility for our financial meltdown is an insult to reason.
Yet, there they go again. Clinton is presented, in a fawning cover story in the current edition of Esquire magazine, as “Someone we can all agree on. … Even his staunchest enemies now regard his presidency as the good old days.” In a softball interview, Clinton is once again allowed to pass himself off as a job creator without noting the subsequent loss of jobs resulting from the collapse of the housing derivatives bubble that his financial deregulatory policies promoted.
At least Summers, in a testier interview by British journalist Krishnan Guru-Murthy of Channel 4 News, was asked some tough questions about his responsibility as Clinton’s treasury secretary for the financial collapse that occurred some years later. He, like Clinton, still defends the reversal of the 1933 Glass-Steagall Act, a 1999 repeal that destroyed the wall between investment and commercial banking put into place by Franklin Roosevelt in response to the Great Depression.
“I think the evidence is that I am right about that. If you look at the big players, Lehman and Bear Stearns were both standalone investment banks,” Summers replied, referring to two investment banks allowed to fold. Summers is very good at obscuring the obvious truth—that the too-big-to-fail banks, made legal by Clinton-era deregulation, required taxpayer bailouts.
It is not certain if John S. Corzine will ever do the perp walk – or even be compelled to answer questions – for his role in the disappearance of over a billion dollars in the MF Global swindle.
The House Financial Services Committee, however, has started a laborious investigation process, no matter how timidly. It has asked Corzine to testify about the collapse of MF Global and the whereabouts of hundreds of millions of dollars in customer money that mysteriously went missing.
It should be noted that Corzine will not be compelled to answer questions or even respond to the request by the House Financial Services Committee. If push comes to shove, the committee has the power to subpoena Corzine and his underling, Bradley Abelow, the firm’s chief operating officer. It has yet to say one way or the other if it intends to do this.
The FBI and the Commodity Futures Trading Commission are now involved finding out what happened. An investigation may take months – long enough for the scandal to fall out of view so it can be swept conveniently under the rug.
It looks like Corzine may avoid accounting for the money or facing responsibility for its disappearance. Instead, blame may be shifted around and lawmakers will spank the regulatory agencies supposedly overseeing the industry.
Corzine is Goldman Sachs alumni and as everybody knows Goldies are above the law.
The collapse this week of the broker-dealer MF Global and the comeuppance of its chief executive Jon Corzine, who resigned Friday, have been and will be put to many political and rhetorical purposes. MF Global’s bankruptcy has been called, possibly, the first domino in a potential collapse of the European banking system; in this rendering, it’s a rough analog to the failure, in the spring of 2008, of Bear Stearns, which presaged the mayhem of autumn. It might well be cast as a catalyst for more government regulation, or smarter regulation; to some, it might even be a case study in overregulation. (Every rationale for regulation seems to contain, as yang to its yin, an argument that regulation is actually to blame.)
Corzine’s downfall is an update on Icarus, an illustration of hubris. It reminds us that leverage kills, that it is dangerous to pick up nickels in front of a steamroller, that risk is risky, that pigs get fat while hogs get slaughtered. It complicates the Democrats’ hopes of harnessing anti-Wall Street fervor in the Presidential election, because Corzine has been one of Barack Obama’s most generous supporters—a possible future Treasury Secretary. The Republicans will not soon let this one go. It certainly further tarnishes the reputation of Goldman Sachs.
Corzine, a former C.E.O. of Goldman, took over a company partially owned by the firm of another ex-Goldmanite, Christopher Flowers, and managed, in a year and a half, to destroy it, in part while resisting oversight from a government regulator (the Commodity Futures Trading Commission) whose chairman, Gary Gensler, is also an Goldman alumnus. It further damages the perception, or myth, that a becoming a partner at Goldman Sachs bespeaks brilliance, or insures success or a lifetime inclusion in the vampiresquidspiracy (although you can find whisperings of a conspiracy theory that Goldman planted Corzine at MF Global in order to destroy it—a notion that is almost as beguiling as it is ludicrous). A report, in the Times, had Flowers showing up at the doomed eleventh-hour save-this-firm discussions in “mismatched shoes”—picture a loafer on one foot, and a white beaded moccasin on the other, a Wall Street gloss on Vinny (the Chin) Gigante wandering around Mott Street in bathrobe and slippers.
Corzine’s collapse is also an occasion for schadenfreude, not only for those among Occupy Wall Street’s 99 per cent, who’d be ready to pitchfork him to pieces just because, but also for the tiny cowering minority, who may resent Goldman for its perceived arrogance or cunning, or who may question the narcissistic folly/civic harm of Corzine’s spending over a hundred million of his own money to get elected to public office. The sentiment, among his peers, was that Corzine wasn’t so great a trader to begin with, and that in the years since he’d left Goldman, his skills, such as they were, had got rusty or outdated. (“I am loving every minute of this,” a hedge fund manager said in an e-mail.)