Remember the $700 billion Troubled Asset Relief Program with which the federal government came to the rescue of faltering banks in 2008? Well, according to a Bloomberg report, that was just a fraction of the financial help the Federal Reserve Bank wound up doling out to troubled lenders. The real total was reportedly closer to $8 trillion, after you add up benefits outside TARP, including emergency loans given at below-market rates:

The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

Bloomberg came up with that number after reviewing “29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions.” Bloomberg adds, “The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day.” That’s nearly twice the amount made public in TARP.

We present five other countries where Goldman Sachs could install bankers as heads of state.

Where to begin, though? Originally, I considered Ireland to be a prime candidate for some Goldman Sachs coup d’etat action, but it seems that Ireland already got the old Goldman Sachs in/out in the form of Peter Sutherland, a non-executive director of Goldman Sachs, as well as a non-executive at BP. Here are five countries that could use a little Goldman Sachs in/out.

Spain: With concerns in Italy lessening amidst the installation of ex-Goldman man Mario Monti as PM, bankers and investors in the eurozone and abroad are looking to Spain, which the BBC is calling the “weaker link in the eurozone chain.”

This is obviously the first country that requires a Goldman Sachs premiership. Get on it boys.

Read the rest from DJ Pangburn at Death and Taxes

Greek Prime Minister George Papandreou decided in favor of democracy yesterday when he announced a national referendum on the draconian budget cuts Europe and the IMF are demanding from Greece in return for bailing it out.

(Or, more accurately, the cuts Europe and the IMF are demanding for bailing out big European banks that have lent Greece lots of money and stand to lose big if Greece defaults on those loans—not to mention Wall Street banks that will also suffer because of their intertwined financial connections with European banks.)

If Greek voters accept the bailout terms, unemployment will rise even further in Greece, public services will be cut more than they have already, the Greek economy will contract, and the standard of living of most Greeks will deteriorate further.

If Greek voters reject the terms and the nation defaults, it will face far higher borrowing costs in the future. This may reduce the standard of living of most Greeks, too. But it doesn’t have to. Without the austerity measures the rest of Europe and the IMF are demanding, the Greek economy has a better chance of growing and more Greeks are likely to find jobs.

Shouldn’t Greek citizens make this decision for themselves?

Of course, if Greek defaults on its loans, global investors (fearing that a default in Greece sets a dangerous precedent) may yank their money out of Italy. This would almost certainly bust several big European banks—and generate panic on Wall Street. That’s why Tim Geithner has been pressing Europe to bail out Greece.

We’ve been here before, remember? Specifically, here in the United States—at the end of 2008 and start of 2009. Wall Street had made lots of bad loans, and the question we faced then was whether to bail out the Street.

The difference is, we didn’t hold a referendum. Instead, the Bush administration told Congress the nation risked “economic Armageddon” if it didn’t immediately authorize a giant bailout of the Street—with no strings attached. Of course Congress hastily agreed. Hank Paulson, Ben Bernanke, and Tim Geithner (as head of the New York Fed) then doled out the money. And the Obama administration (with Geithner installed as Treasury Secretary) gave out more.

If Americans had been consulted about the 2008-2009 Wall Street bailout, I doubt it would have happened the way it did. At the very least, strict conditions would have been placed on the banks in return for the money. The banks would have had to eat the losses of the predatory mortgages they sold, and help homeowners reduce those mortgages. They’d be required to improve the capitalization of small banks in communities across the country. They’d be forced to accept stringent new regulations, including resurrection of Glass-Steagall.

1. Break up the monopolies. The so-called “Too Big to Fail” financial companies – now sometimes called by the more accurate term “Systemically Dangerous Institutions” – are a direct threat to national security. They are above the law and above market consequence, making them more dangerous and unaccountable than a thousand mafias combined. There are about 20 such firms in America, and they need to be dismantled; a good start would be to repeal the Gramm-Leach-Bliley Act and mandate the separation of insurance companies, investment banks and commercial banks.

2. Pay for your own bailouts. A tax of 0.1 percent on all trades of stocks and bonds and a 0.01 percent tax on all trades of derivatives would generate enough revenue to pay us back for the bailouts, and still have plenty left over to fight the deficits the banks claim to be so worried about. It would also deter the endless chase for instant profits through computerized insider-trading schemes like High Frequency Trading, and force Wall Street to go back to the job it’s supposed to be doing, i.e., making sober investments in job-creating businesses and watching them grow.

3. No public money for private lobbying. A company that receives a public bailout should not be allowed to use the taxpayer’s own money to lobby against him. You can either suck on the public teat or influence the next presidential race, but you can’t do both. Butt out for once and let the people choose the next president and Congress.

4. Tax hedge-fund gamblers. For starters, we need an immediate repeal of the preposterous and indefensible carried-interest tax break, which allows hedge-fund titans like Stevie Cohen and John Paulson to pay taxes of only 15 percent on their billions in gambling income, while ordinary Americans pay twice that for teaching kids and putting out fires. I defy any politician to stand up and defend that loophole during an election year.

5. Change the way bankers get paid. We need new laws preventing Wall Street executives from getting bonuses upfront for deals that might blow up in all of our faces later. It should be: You make a deal today, you get company stock you can redeem two or three years from now. That forces everyone to be invested in his own company’s long-term health – no more Joe Cassanos pocketing multimillion-dollar bonuses for destroying the AIGs of the world.

To quote the immortal political philosopher Matt Damon from Rounders, “The key to No Limit poker is to put a man to a decision for all his chips.” The only reason the Lloyd Blankfeins and Jamie Dimons of the world survive is that they’re never forced, by the media or anyone else, to put all their cards on the table. If Occupy Wall Street can do that – if it can speak to the millions of people the banks have driven into foreclosure and joblessness – it has a chance to build a massive grassroots movement. All it has to do is light a match in the right place, and the overwhelming public support for real reform – not later, but right now – will be there in an instant.

Public Radio International concludes: “Campaign spending in the 2012 US election could reach $6 or 7 billion dollars as outside groups pay for electoral influence.”

Here we are in the middle of a deep recession that’s getting deeper by the day, with austerity the unofficial slogan du jour while Republican scheme up new ways to trim, cut and decimate government spending, and parties are spending billions on political horse races.

They decry government spending but they don’t talk much about their own spending, do they?

And neither do the Democrats who are also backing an orgy of spending cuts if only to show their opponents how “responsible” they are.

As both parties slash spending that benefits people, they are in a manic overdrive effort to raise more for themselves and their campaigns.

Dave Levinthal, director of the Center for Responsive Politics told PRI’s Here and Now:

“In 2008, Barack Obama raised some $778 million for his presidential bid. The total cost of the national election, including Presidential and Congressional, was about $5.3 billion. Since then, court decisions like Citizens United have made spending by outside groups easier. In 2012, you’re easily looking at 6, maybe even 7 billion dollars nationwide.”

The Center for Responsive Politics has already reported that Wall Street “bundlers” have generated more money for the Obama campaign than they did four years ago, even as anger with the financial behemoths grows in the base of the Democratic Party.

Spending by outside groups was about 4 times higher in 2010 than it was in 2006. Much of that can be attributed to new, looser campaign laws.

Levinthal explains:

“The laws changed in a way that effectively allowed these outside groups to raise and spend unlimited sums of money to say whatever they want, to do it whenever they wanted to, and they could do it in as strong a term as they wanted to.”

These developments get scant media attention for one good reason: the media is a prime beneficiary of a political system dominated by big money.

Much of these billions are raised for political advertising. The networks get it. No wonder, they are out to sell more than tell.

Listen to the editor of Cable Fax, an industry publication that is planning a Webinar to help TV executives “monetize” (i.e., make more money from) the 2012 elections and its vast “political spend.”

Here’s editor Amy Maclean pitching her media readers in high places:

“The 2012 elections will be here before you know it, so now is the perfect time to start planning your strategy and make sure to maximize your share of the political ad spend. Join us Tuesday, August 30 for our CableFAX Webinar: Monetize Election 2012: Advanced Political Advertising. You’ll get sound advice and practical tips to make the most of interactivity and multiplatform campaigns.

“While cable’s total of campaign ad dollars continues to climb to record levels, (emphasis mine) the next question is how to make that two-way plan more attractive to campaigns through the use of Video On Demand (VOD,) RFIs, online and other interactive elements.

“Last year, California Republican gubernatorial candidate Meg Whitman helped put RFI (Request for Information) political spots on the map, using the technology to allow viewers to request things such as bumper stickers and volunteer info. The innovation continues, with 2012 expected to really help the industry further distinguish itself with its advanced political advertising offerings.

“Additionally, the recent Citizens United Supreme Court case opened the way for corporations and unions to drop major coin to back candidates and issues.”

Cable Fax wants its readers to know how best to “navigate the race in November and drive additional advertising revenues,” (i.e.“drop coins” in their pockets.)

The irony is that while most TV networks insist they are bi-partisan and don’t flack for any candidates, their coverage is, in effect, flacking for themselves — to bolster revenues by siphoning off as many political donations that they can slip and slide into their own coffers.

This corporate self-interest is rarely explained or even admitted but in a tough advertising market—with the economy in collapse mode—politics primes the media pump.

Campaigns are windfalls for broadcasters. The networks that oppose stimulus programs for workers with so many snarky stories, don’t oppose this stimulus for themselves.

Promoting elections has become an industry of its own and TV networks are at the center of it. They are not devoting much time to promoting voter registration or voter education. They don’t provided many free ads and in fact often refuse to run issue-oriented ads bought by activists.

This agenda is wrapped up in the mantle of enabling democracy, but it is, of course, much more than that. Most of the coverage is about the personality parade and horse race, not the issues. It focuses on canddiates more than political organizing. There seems to be little concern with new measures like voter ID cards designed to suppress the vote or electoral fraud designed to steal it.

The fact is that the political circus is good for business, not democracy. The Providence Phoenix reports, “Political coverage on television is diminishing, and revenue from political advertising is soaring. Critics say free airtime for candidates could help solve the problem.”

Writes Ian Donnis:

“The Alliance for Better Campaigns (ABC), a Washington, DC-based nonpartisan group that advocates for political campaigns that inform voters and increase their participation in the political process, is pushing a proposal that would force broadcasters to offer free air time to political candidates before elections — in addition to increasing political coverage overall. Proponents say the idea is the next frontier in campaign-finance reform.”

These proposals have been around for years, endorsed by former Presidents and the late Walter Cronkite, but they have gone nowhere. Why? Why should the networks give away air time when they are paid so handsomely for it?

“Nearly every democracy in the world has some kind of mandate for free television time during campaigns. Broadcasters can afford it: profit margins of 30 percent, 40 percent, and even 50 percent are common in broadcasting, according to Paul Taylor, the former Washington Post reporter who serves as president of the Alliance for Better Campaigns. And, since the Communications Act of 1934 was enacted, broadcasters’ free and exclusive use of the airwaves has also been conditioned on their agreement to function as public trustees.”

Ha!

It’s hard not to conclude that their inaction, and unwillingness to reform their own practices, is caused by network’s own bottom-line greed – always justified in the name of preserving the first amendment, of course.

The truth is our valiant TV networks are undermining democracy, not bolstering it. These campaigns create jobs for their own pollsters, pundits and partisans. This spectacle does not serve a public deeply disenchanted with sleaze in suits and political corruption.

Instead “monetized election coverage” is a fixture, a part of the problem. The New York Times reports in detail how Rick Perry’s high net worth donors benefited financially when state money went, tit for tat, into their businesses.

The watchdogs have become lapdogs when it comes to monitoring and disclosing their own agendas and profits.

Who will watch the watchers?

Filmmaker and News Dissector Danny Schechter edits Mediachannel.org.

For more on his film Plunder: The Crime of Our Time and companion book, The Crime of Our Time: Why Wall Street Is Not Too Big To Jail, visit plunderthecrimeofourtime.com.

Photo: Agamisudo (CC)

Oh thank you, Wikipedia, for this definition:

“Irrationality is cognition, thinking, talking or acting without inclusion of rationality. It is more specifically described as an action or opinion given through inadequate reasoning, emotional distress, or cognitive deficiency. The term is used, usually pejoratively, to describe thinking and actions that are, or appear to be, less useful or more illogical than other more rational alternatives.”

And what about this one? Market Psychology?  This term is defined in the Investopedia this way:

“The overall sentiment or feeling that the market is experiencing at any particular time. Greed, fear, expectations and circumstances are all factors that contribute to the group’s overall investing mentality of sentiment.”

Q: What do we have when we put the two together?

A: The current madness and market mayhem.

S&P’s downgrade is being blamed for the market panic even though all the business media expected a downgrade and initially minimized its potential impact. The ratings agency blamed the government’s failure to deal with the debt including the stalemate in Congress.

The Republicans, predictably blamed Obama and the Democrats went after the Tea Party as the culprits behind the market plunge. But then, investors who at first denied that a downgrade would be significant overreacted to it by pumping more money into government treasuries adding to government debt.

The Comedy Channel’s Jon Stewart’s sensible reaction: “are you f*cking kidding me?”

Does this make any sense?

We are taught to think of businessmen and their minions as absolute worshipers of objective truth as they allegedly practice “due diligence” to confirm underlying facts and insure that their decisions are based on research and thoughtful decisions.

That’s what we are taught—but is that what they do?

In fact, the “smartest guys in the room” as the Enronians were called proved to be the dumbest, buying into a warped worldview, and then, believing their own hype leading to decisions that brought the house down.

And that’s what happens again and again, over and over, as panic seizes The Street followed by a herd of decision makers making bad decisions.

Paul Farrell has written about this phenomenon on Marketwatch.

He speaks of all the too-greedy-to-fail fatheads running Wall Street? And, unfortunately, Main Street America’s 95 million irrational and self-sabotaging investors

Yes, all of us! We’re Americans. Don’t confuse us with the facts, with reality. We’re the greatest in history, a legend in our own minds. And a rapidly mutating virus is spreading this lethal pandemic far beyond the shores of Lake Wobegon. Yes, folks, the “Lake Wobegon Effect” is hard-wired in America’s brain, an illusion of superiority, a smug arrogance where each knows we are the best, the chosen ones.

Warning: The Lake Wobegon Effect is the single best summary of today’s stock market psychology, high frequency trading, behavioral economics theories and the new science of irrationality … and it’s sucking the life out of America’s soul. Here, listen to more of these arrogant musings surfacing everywhere from deep in our collective brains.

So forget all of our devices, our forever present blackberries, iPhones, iPads and Bloomberg terminals with their enhanced graphics and multiple sources. Alas, there’s no panic button that gives you a quick dose of financial history, perspective or context. Our hi-tech world often leads to repeating low-tech mistakes in a speeded up environment driven byall those dazzling terminals. TVscreens blazing and the pundits buzzing.

Farrell reminds us of a psychological game called “The Invisible Gorilla.”

He calls it “one of the most famous psychological demos ever. Subjects are shown a video, about a minute long, of two teams, one in white shirts, the other in black shirts, moving around and passing basketballs to one another. They are asked to count the number of aerial and bounce passes made by the team wearing white, a seemingly simple task.”

Stop. Test yourself before you read on. What does “The Invisible Gorilla” study tell you about the brains of folks gambling in Wall Street’s casinos? Where billions of shares, trillions of dollars, stocks, bonds, derivatives trade daily? What’s “invisible” to you?”

Institutionalized Irrationality—perhaps even insanity— helped cause the financial crisis as the federal inquiry commission pointed out quoting an appraiser who watched the real estate industry underwrite loans with no collateral over and over again:

“I see a lot of irrationality,” he added. He said he was unnerved because people were saying, “It’s different this time”—a rationale commonly heard before previous collapses.”

Many writers of distinction could see the irrational trumping the rational coming, as I wrote in my book Plunder that came out a month before the 2008 crash.

I quoted Mark Twain, America’s greatest man of letters, He once asked, “Why shouldn’t truth be stranger than fiction? Fiction, after all, has to make sense.” (His novella, The Man Who Corrupted Hadleyburg, was written while he was in Europe on the run from creditors.)

Fast forward a century or more as business and political leaders alike try to make sense of a relatively sudden and unexpected market meltdown in the summer of 2007 then again in 2008 and then again this past week.

Ultimately perhaps Twain’s insight will lead to great novels that will capture the corruption of the underlying culture that allowed so many financial manipulations and so much greed, avarice, and irrationality in this era in the way that great writers of economic upheaval in America like Upton Sinclair, John Dos Passos, or Jack London castigated theirs.

It seems to have always been true, as a friend who watched his multi- ethnic city of Sarajevo implode into a bloody genocidal war in Bosnia years ago confided to me, “Only fiction has to be plausible. Real life has no such constraint.”

As a journalist with perhaps less fictional imagination than I need, I can only try to probe deeply into some of the forces that took our economy down in such an unexpected way at a time when our national leaders were looking elsewhere and thought they saw the only threat to our country coming from terrorists hiding in caves in far away lands.

They – and I include among them, representatives of both parties, and most of our mass media – ignored cries for help from victims of predatory lenders dating back into the 1990s, and, then, for years warnings from David Walker, the Comptroller of our Currency and head of the Government Accounting Office (GAO) that our growing debt burden could lead to a sudden collapse threatening our national security. He had been labeled “Dr. Gloom” for his sobering prognostications. In February, 2008, he stepped down from government, frustrated by his inability to promote changes.

A closer look, usually in times of crisis, offers a window into another kind of financial world, a world of panic and fear, where irrationality is the order of the day, an irrationality that goes by the name of “Market Psychology.”

Forget the bulls or the bears…this is a world of sharks deeply in need of shrinks.

When things go well, the wizards of Wall Street are anointed by the media as geniuses. When they don’t, you get Time Magazine’s condescending putdown of “Wall Street’s mad scientists blowing up the lab again.”

This kind of humor seems out-of-place when we are talking about what many fear has lead to the collapse or at least a severe wounding of the global economy with millions of jobless and homeless victims who believed in the system until it failed them.

And yet, as we saw in the great manufactured budget stalemate in Washington, members of Congress were and still are prepared to trigger a collapse in the name of a naïve but rigid ideology.

Some of us argue with them thinking our facts can refute theirs but at bottom, fanaticism is not neutralized by rational argument. You need countervailing power and a willingness to fight for another vision.

Filmmaker and News Dissector Danny Schechter edits Mediachannel.org.

For more on his film Plunder: The Crime of Our Time and companion book, The Crime of Our Time: Why Wall Street Is Not Too Big To Jail, visit plunderthecrimeofourtime.com.

…the bottom line is this: A highly complex and largely discrete set of laws and exemptions from laws has been put in place by those in the uppermost reaches of the U.S. financial system. It allows them to protect and increase their wealth and significantly affect the U.S. political and legislative processes. They have real power and real wealth. Ordinary citizens in the bottom 99.9% are largely not aware of these systems, do not understand how they work, are unlikely to participate in them, and have little likelihood of entering the top 0.5%, much less the top 0.1%. Moreover, those at the very top have no incentive whatsoever for revealing or changing the rules. I am not optimistic.

(Full Article Here)

When the language used by financial analysts and reporters becomes increasingly similar the stock market may be overheated, say scientists.

After examining 18,000 online articles published by the Financial Times, The New York Times, and the BBC, computer scientists have discovered that the verbs and nouns used by financial commentators converge in a ‘herd-like’ fashion in the lead up to a stock market bubble. Immediately afterwards, the language disperses.

The findings presented at the International Joint Conference on Artificial Intelligence, Barcelona, Spain, on July 19, 2011, show that the trends in the use of words by financial journalists correlate closely with changes in the leading stock indices.

“Our analysis shows that trends in the use of words by financial journalists correlate closely with changes in the leading stock indices — the DJI, the NIKKEI-225, and FTSE-100,” says Professor Mark Keane, Chair of Computer Science in University College Dublin, who was involved in the research.

More on ScienceDaily

This is the introduction to

The purpose of this book is to make money and human economy as sacred as everything else in the universe.

Today we associate money with the profane, and for good reason. If anything is sacred in this world, it is surely not money. Money seems to be the enemy of our better instincts, as is clear every time the thought “I can’t afford to” blocks an impulse toward kindness or generosity. Money seems to be the enemy of beauty, as the disparaging term “a sellout” demonstrates. Money seems to be the enemy of every worthy social and political reform, as corporate power steers legislation toward the aggrandizement of its own profits. Money seems to be destroying the earth, as we pillage the oceans, the forests, the soil, and every species to feed a greed that knows no end.

From at least the time that Jesus threw the money changers from the temple, we have sensed that there is something unholy about money. When politicians seek money instead of the public good, we call them corrupt. Adjectives like “dirty” and “filthy” naturally describe money. Monks are supposed to have little to do with it: “You cannot serve God and Mammon.”

At the same time, no one can deny that money has a mysterious, magical quality as well, the power to alter human behavior and coordinate human activity. From ancient times thinkers have marveled at the ability of a mere mark to confer this power upon a disk of metal or slip of paper. Unfortunately, looking at the world around us, it is hard to avoid concluding that the magic of money is an evil magic.

Obviously, if we are to make money into something sacred, nothing less than a wholesale revolution in money will suffice, a transformation of its essential nature. It is not merely our attitudes about money that must change, as some self-help gurus would have us believe; rather, we will create new kinds of money that embody and reinforce changed attitudes. Sacred Economics describes this new money and the new economy that will coalesce around it. It also explores the metamorphosis in human identity that is both a cause and a result of the transformation of money. The changed attitudes of which I speak go all the way to the core of what it is to be human: they include our understanding of the purpose of life, humanity’s role on the planet, the relationship of the individual to the human and natural community; even what it is to be an individual, a self. After all, we experience money (and property) as an extension of our selves; hence the possessive pronoun “mine” to describe it, the same pronoun we use to identify our arms and heads. My money, my car, my hand, my liver. Consider as well the sense of violation we feel when we are robbed or “ripped off,” as if part of our very selves had been taken.

A transformation from profanity to sacredness in money-something so deep a part of our identity, something so central to the workings of the world-would have profound effects indeed. But what does it mean for money, or anything else for that matter, to be sacred? It is in a crucial sense the opposite of what sacred has come to mean. For several thousand years, the concepts of sacred, holy, and divine have referred increasingly to something separate from nature, the world, and the flesh. Three or four thousand years ago the gods began a migration from the lakes, forests, rivers, and mountains into the sky, becoming the imperial overlords of nature rather than its essence. As divinity separated from nature, so also it became unholy to involve oneself too deeply in the affairs of the world. The human being changed from a living embodied soul into its profane envelope, a mere receptacle of spirit, culminating in the Cartesian mote of consciousness observing the world but not participating in it, and the Newtonian watchmaker-God doing the same. To be divine was to be supernatural, nonmaterial. If God participated in the world at all, it was through miracles-divine intercessions violating or superseding nature’s laws.

Paradoxically, this separate, abstract thing called spirit is supposed to be what animates the world. Ask the religious person what changes when a person dies, and she will say the soul has left the body. Ask her who makes the rain fall and the wind blow, and she will say it is God. To be sure, Galileo and Newton appeared to have removed God from these everyday workings of the world, explaining it instead as the clockwork of a vast machine of impersonal force and mass, but even they still needed the Clockmaker to wind it up in the beginning, to imbue the universe with the potential energy that has run it ever since. This conception is still with us today as the Big Bang, a primordial event that is the source of the “negative entropy” that allows movement and life. In any case, our culture’s notion of spirit is that of something separate and nonworldly, that yet can miraculously intervene in material affairs, and that even animates and directs them in some mysterious way.

It is hugely ironic and hugely significant that the one thing on the planet most closely resembling the forgoing conception of the divine is money. It is an invisible, immortal force that surrounds and steers all things, omnipotent and limitless, an “invisible hand” that, it is said, makes the world go ’round. Yet, money today is an abstraction, at most symbols on a piece of paper but usually mere bits in a computer. It exists in a realm far removed from materiality. In that realm, it is exempt from nature’s most important laws, for it does not decay and return to the soil as all other things do, but is rather preserved, changeless, in its vaults and computer files, even growing with time thanks to interest. It bears the properties of eternal preservation and everlasting increase, both of which are profoundly unnatural. The natural substance that comes closest to these properties is gold, which does not rust, tarnish, or decay. Early on, gold was therefore used both as money and as a metaphor for the divine soul, that which is incorruptible and changeless.

Money’s divine property of abstraction, of disconnection from the real world of things, reached its extreme in the early years of the twenty-first century as the financial economy lost its mooring in the real economy and took on a life of its own. The vast fortunes of Wall Street were unconnected to any material production, seeming to exist in a separate realm.

Looking down from Olympian heights, the financiers called themselves “masters of the universe,” channeling the power of the god they served to bring fortune or ruin upon the masses, to literally move mountains, raze forests, change the course of rivers, cause the rise and fall of nations. But money soon proved to be a capricious god. As I write these words, it seems that the increasingly frantic rituals that the financial priesthood uses to placate the god Money are in vain. Like the clergy of a dying religion, they exhort their followers to greater sacrifices while blaming their misfortunes either on sin (greedy bankers, irresponsible consumers) or on the mysterious whims of God (the financial markets). But some are already blaming the priests themselves.

What we call recession, an earlier culture might have called “God abandoning the world.” Money is disappearing, and with it another property of spirit: the animating force of the human realm. At this writing, all over the world machines stand idle. Factories have ground to a halt; construction equipment sits derelict in the yard; parks and libraries are closing; and millions go homeless and hungry while housing units stand vacant and food rots in the warehouses. Yet all the human and material inputs to build the houses, distribute the food, and run the factories still exist. It is rather something immaterial, that animating spirit, which has fled. What has fled is money. That is the only thing missing, so insubstantial (in the form of electrons in computers) that it can hardly be said to exist at all, yet so powerful that without it, human productivity grinds to a halt. On the individual level as well, we can see the demotivating effects of lack of money. Consider the stereotype of the unemployed man, nearly broke, slouched in front of the TV in his undershirt, drinking a beer, hardly able to rise from his chair. Money, it seems, animates people as well as machines. Without it we are dispirited.

We do not realize that our concept of the divine has attracted to it a god that fits that concept, and given it sovereignty over the earth. By divorcing soul from flesh, spirit from matter, and God from nature, we have installed a ruling power that is soulless, alienating, ungodly, and unnatural. So when I speak of making money sacred, I am not invoking a supernatural agency to infuse sacredness into the inert, mundane objects of nature. I am rather reaching back to an earlier time, a time before the divorce of matter and spirit, when sacredness was endemic to all things.

And what is the sacred? It has two aspects: uniqueness and relatedness. A sacred object or being is one that is special, unique, one of a kind. It is therefore infinitely precious; it is irreplaceable. It has no equivalent, and thus no finite “value,” for value can only be determined by comparison. Money, like all kinds of measure, is a standard of comparison.

Unique though it is, the sacred is nonetheless inseparable from all that went into making it, from its history, and from the place it occupies in the matrix of all being. You might be thinking now that really all things and all relationships are sacred. That may be true, but though we may believe that intellectually, we don’t always feel it. Some things feel sacred to us, and some do not. Those that do, we call sacred, and their purpose is ultimately to remind us of the sacredness of all things.

Today we live in a world that has been shorn of its sacredness, so that very few things indeed give us the feeling of living in a sacred world. Mass-produced, standardized commodities, cookie-cutter houses, identical packages of food, and anonymous relationships with institutional functionaries all deny the uniqueness of the world. The distant origins of our things, the anonymity of our relationships, and the lack of visible consequences in the production and disposal of our commodities all deny relatedness. Thus we live without the experience of sacredness. Of course, of all things that deny uniqueness and relatedness, money is foremost. The very idea of a coin originated in the goal of standardization, so that each drachma, each stater, each shekel, and each yuan would be functionally identical. Moreover, as a universal and abstract medium of exchange, money is divorced from its origins, from its connection to matter. A dollar is the same dollar no matter who gave it to you. We would think someone childish to put a sum of money in the bank and withdraw it a month later only to complain, “Hey, this isn’t the same money I deposited! These bills are different!”

By default then, a monetized life is a profane life, since money and the things it buys lack the properties of the sacred. What is the difference between a supermarket tomato and one grown in my neighbor’s garden and given to me? What is different between a prefab house and one built with my own participation by someone who understands me and my life? The essential differences all arise from specific relationships that incorporate the uniqueness of giver and receiver. When life is full of such things, made with care, connected by a web of stories to people and places we know, it is a rich life, a nourishing life. Today we live under a barrage of sameness, of impersonality. Even customized products, if mass-produced, offer only a few permutations of the same standard building blocks. This sameness deadens the soul and cheapens life.

The presence of the sacred is like returning to a home that was always there and a truth that has always existed. It can happen when I observe an insect or a plant, hear a symphony of birdsongs or frog calls, feel mud between my toes, gaze upon an object beautifully made, apprehend the impossibly coordinated complexity of a cell or an ecosystem, witness a synchronicity or symbol in my life, watch happy children at play, or am touched by a work of genius. Extraordinary though these experiences are, they are in no sense separate from the rest of life. Indeed, their power comes from the glimpse they give of a realer world, a sacred world that underlies and interpenetrates our own.

What is this “home that was always there,” this “truth that has always existed”? It is the truth of the unity or the connectedness of all things, and the feeling is that of participating in something greater than oneself, yet which also is oneself. In ecology, this is the principle of interdependence: that all beings depend for their survival on the web of other beings that surrounds them, ultimately extending out to encompass the entire planet. The extinction of any species diminishes our own wholeness, our own health, our own selves; something of our very being is lost.

If the sacred is the gateway to the underlying unity of all things, it is equally a gateway to the uniqueness and specialness of each thing. A sacred object is one of a kind; it carries a unique essence that cannot be reduced to a set of generic qualities. That is why reductionist science seems to rob the world of its sacredness, since everything becomes one or another combination of a handful of generic building blocks. This conception mirrors our economic system, itself consisting mainly of standardized, generic commodities, job descriptions, processes, data, inputs and outputs, and-most generic of all-money, the ultimate abstraction. In earlier times it was not so. Tribal peoples saw each being not primarily as a member of a category, but as a unique, enspirited individual. Even rocks, clouds, and seemingly identical drops of water were thought to be sentient, unique beings. The products of the human hand were unique as well, bearing through their distinguishing irregularities the signature of the maker. Here was the link between the two qualities of the sacred, connectedness and uniqueness: unique objects retain the mark of their origin, their unique place in the great matrix of being, their dependency on the rest of creation for their existence. Standardized objects, commodities, are uniform and therefore disembedded from relationship.

In this book I will describe a vision of a money system and an economy that is sacred, that embodies the interrelatedness and the uniqueness of all things. No longer will it be separate, in fact or in perception, from the natural matrix that underlies it. It reunites the long-sundered realms of human and nature; it is an extension of ecology that obeys all of its laws and bears all of its beauty.

Within every institution of our civilization, no matter how ugly or corrupt, there is the germ of something beautiful: the same note at a higher octave. Money is no exception. Its original purpose is simply to connect human gifts with human needs, so that we might all live in greater abundance. How instead money has come to generate scarcity rather than abundance, separation rather than connection, is one of the threads of this book. Yet despite what it has become, in that original ideal of money as an agent of the gift we can catch a glimpse of what will one day make it sacred again. We recognize the exchange of gifts as a sacred occasion, which is why we instinctively make a ceremony out of gift giving. Sacred money, then, will be a medium of giving, a means to imbue the global economy with the spirit of the gift that governed tribal and village cultures, and still does today wherever people do things for each other outside the money economy.

Sacred Economics describes this future and also maps out a practical way to get there. Long ago I grew tired of reading books that criticized some aspect of our society without offering a positive alternative. Then I grew tired of books that offered a positive alternative that seemed impossible to reach: “We must reduce carbon emissions by 90 percent.” Then I grew tired of books that offered a plausible means of reaching it but did not describe what I, personally, could do to create it. Sacred Economics operates on all four levels: it offers a fundamental analysis of what has gone wrong with money; it describes a more beautiful world based on a different kind of money and economy; it explains the collective actions necessary to create that world and the means by which these actions can come about; and it explores the personal dimensions of the world-transformation, the change in identity and being that I call “living in the gift.”

A transformation of money is not a panacea for the world’s ills, nor should it take priority over other areas of activism. A mere rearrangement of bits in computers will not wipe away the very real material and social devastation afflicting our planet. Yet, neither can the healing work in any other realm achieve its potential without a corresponding transformation of money, so deeply is it woven into our social institutions and habits of life. The economic changes I describe are part of a vast, all-encompassing shift that will leave no aspect of life untouched.

Humanity is only beginning to awaken to the true magnitude of the crisis on hand. If the economic transformation I will describe seems miraculous, that is because nothing less than a miracle is needed to heal our world. In all realms, from money to ecological healing to politics to technology to medicine, we need solutions that exceed the present bounds of the possible. Fortunately, as the old world falls apart, our knowledge of what is possible expands, and with it expands our courage and our willingness to act. The present convergence of crises-in money, energy, education, health, water, soil, climate, politics, the environment, and more-is a birth crisis, expelling us from the old world into a new. Unavoidably, these crises invade our personal lives, our world falls apart, and we too are born into a new world, a new identity. This is why so many people sense a spiritual dimension to the planetary crisis, even to the economic crisis. We sense that “normal” isn’t coming back, that we are being born into a new normal: a new kind of society, a new relationship to the earth, a new experience of being human.

I dedicate all of my work to the more beautiful world our hearts tell us is possible. I say our “hearts,” because our minds sometimes tell us it is not possible. Our minds doubt that things will ever be much different from what experience has taught us. You may have felt a wave of cynicism, contempt, or despair as you read my description of a sacred economy. You might have felt an urge to dismiss my words as hopelessly idealistic. Indeed, I myself was tempted to tone down my description, to make it more plausible, more responsible, more in line with our low expectations for what life and the world can be. But such an attenuation would not have been the truth. I will, using the tools of the mind, speak what is in my heart. In my heart I know that an economy and society this beautiful are possible for us to create-and indeed that anything less than that is unworthy of us. Are we so broken that we would aspire to anything less than a sacred world?

[Charles Eisenstein's Sacred Economics: Money, Gift, and Society in the Age of Transition is available from Amazon.com in ebook and print editions.]

I call it sabotage, a tactic that goes way back and involves deliberate effort to insure that reforms are effectively undermined.

When the book came out, Publishers Weekly praised it and criticized it in the same breath, writing,

“Frank paints a complex and conspiracy-ridden picture that illuminates the sinister and controversial practices of the Republican Party in the 20th and 21st centuries. While Frank’s assessments and interpretations of key events, players and party doctrines is accurate and justifiable, his overwhelming blame of the Republican Party as the source of everything that’s wrong with this county and as the emblem of self-destructing government denies the Democrats and the citizenry their roles in a decaying democracy”

How true! They didn’t quibble with his findings, calling them “accurate and justifiable,” but also note that political labels are often poor guides to understanding how this game operates.

That’s because politics is no longer, if it ever was, a game played just by politicians. Politics is now an industry that plays itself out in an arena of the seen and unseen. Today, the hatchets are out to torpedo needed financial reforms in a bill that has already been neutered and nit-picked, trimmed, sliced and diced by what’s called legislative compromise.

A Congressional style Seal Team Six has been assembled and is ready to pounce against the new enemy—financial reform. There is no corporate privilege or malevolent bank practice that the lobbyists will not defend in the name of fostering economic growth.

One juicy sex scandal involving one or more pols gets more ink than all the investigations of how special interests, well paid lobbyists, billionaire funders, think-tank gun-slingers and slippery lawyers for hire operate to serve the status quo and stop even mild reforms that might cost the industries they work for money or influence. They are no reforms they won’t endlessly amend into oblivion.

First, they commission bogus and selective studies to “prove” why reforms need to be “reformed” their way. Then, with PR and complicit media, they orchestrate coverage to sell their policies. They start with something small like protections for debit cards and then escalate a full-scale war.

Thanks to the Democratic majority in the Senate, an attempt to delay rules governing what banks and credit card companies can charge for retailers to process cards was voted down, with the NY Times noting that this war will continue, “Even with the defeat, the vote represented a remarkable come-from-behind lobbying campaign by banks to recover from the drubbing they took during the anti-Wall Street atmosphere that pervaded last year.”

A day later, the knives were out for the new Consumer Protection bureau with a major campaign targeting Harvard Law Professor Elizabeth Warren who first proposed the agency and was considered the most qualified to lead it. She was then demonized by the industry and the right—and now the Obama Administration seems ready to abandon her, rather than fight for her.

Four years ago, the markets melted down sparking a global crisis. The bailouts followed and a bank-led “recovery” helped many banks recover. Unemployment and foreclosures stayed high. Growth seized up. The crisis continues.

What to do?

There were several schools of thought.

The Administration locked itself into an alliance with Wall Street. They killed proposals for structural reform and restraints on private economic power. They are gambling on a turnaround—their version of faith-based politics—even as jobs are not coming back.

In short they have no answers and are not prepared to fight any messy battles with the real power structure. In the name of pragmatism, they are betrayed their own campaign compromises and tacked right to out Republican the Republicans.

They call it “triangulation.” Their critics call it a sell-out although, what’s left of the left was quickly left out.

The Republicans retreated into simplistic ideologies, blaming everything on Democrats and government spending. They began fueling a scare about the deficit the way their predecessors raved against the Red Menace.

They have no answers either.

In Congress, the wise men came up with a financial reform called Dodd-Frank, after stripping it of any radicalism, they offered up some pragmatic measures to increase regulation and try to force the finance industry to act responsibly with more transparency and accountability. The bill explicitly rejected proposes for any and all international standards.

Dodd-Frank passed, but then the real bargaining began on what the new rules should be. The finance industry mounted a lobbying force of 25 high-powered lawyers and consultants for every member of Congress. The deliberations moved out of public view and into the corridors and closed clubs in Washington.

The predictable result has now surfaced in The New York Times:

“Nearly one year after Congress passed financial changes to rein in the banking sector, more than two dozen of the legislation’s rules are behind schedule, and no end to the wrangling over details is in sight.

The delays come as regulators extend public comment periods on the rules, and as some on Wall Street and in Congress resist the changes. One result may be that many new safeguards do not take hold in earnest before the next election, an outcome that could open the door for newly elected officials to back away from the overhaul.”

The respected blog, Naked Capitalism, has followed this in excruciating detail. Concluded Richard Smith, a London based capital markets IT Specialist:

“So where does that leave us with our shadow banking reforms? Well, we have a modest tweak to bank capital requirements, of unknown efficacy. The mountain has labored, and brought forth a mouse.

Or you might prefer to pursue the anaconda/rabbit imagery to a physiologically realistic conclusion.”

(Translation: The snake swallowed the rabbit.)

Yves Smith, the editor of the blog is not surprised, suggesting this was the outcome that was always intended: To kill the bill by appearing to “strengthen” it.

So where are we? Nowhere, or perhaps it’s even worse than that. Many in the public backed the reforms including protections of consumers. They think it is being enacted.

When the next market crash occurs, as many insiders fear it will, they will realize how they were played, but then it will be too late.

Are we condemned for more of this rollercoaster ride to the apocalypse?

Smith seems disgusted, pointing out that even these tepid reforms emerged from a “weak analysis of the causes of the crash, some disjointed looking proposals, some mild BS. Kind of picking at the problem, with lobbyists at the ready.

But what is the result of nine months’ thought and some horse-trading with concerned Congressmen, juggling lobbyists and angry voters?

What, indeed! We can see where all this is headed. We will find out soon enough if the predications of a possible “great, great depression” come to pass.

The problem is that while many see, the logic of an illogical system, so intricately sabotaged from within, it is set up to make almost impossible to stop the train wreck.

On this, the press is largely missing following the semen, not the money.

The astute economics editor of the Guardian, Larry Eliot, sees only one possible way to stop this disaster in the making.

“Policy, as ever, is geared towards growth because the great existential fear of the Federal Reserve, the Treasury and whoever occupies the White House is a return to the 1930s. Back then; the economic malaise could be largely attributed to deflationary economic policies that deepened the recession caused by the popping of the 1920s share market bubble. The feeble response to today’s growth medicine suggests the US is structurally far weaker than it was in the 1930s.” (Emphasis mine)

To tackle these weaknesses it must break finance’s stranglehold over the economy and boost ordinary families’ spending power to cut their reliance on debt.

Can we break finance’s stranglehold over the economy if these issues displace the sex scandal of the week, as the real threat to our future? Can we identify and stop the saboteurs?

We keep reading about the Arab Spring, but not the American winter.

Filmmaker and News Dissector Danny Schechter edits Mediachannel.org.

For more on his film Plunder: The Crime of Our Time and companion book The Crime Of Our Time: Why Wall Street Is Not Too Big To Jail, visit plunderthecrimeofourtime.com

1. Insider Trading. If the Feds could tape every hedge fund we’d get an earful of how hedge funds use “expert networks” to transfer bits of illegal information that provide hedge fund managers with knowledge of events that are sure to move markets and make them a bundle.

2. Ponzi Schemes. Madoff isn’t the only one. Hedge funds and Ponzi schemes are made for each other since the funds are designed to evade so many disclosure regulations. It’s virtually a sure thing that every new year will reveal another Ponzi scheme through which a hedge fund steals money from investors and then uses new investor money to pay returns to the old investors.

3. Tax Evasion. No surprise here. Wherever you find billionaire financiers, you’ll find schemes to move money around the globe to dodge taxes. Fortunately, Rudolf M. Elmer, a Swiss banker, has blown the whistle on an international web of rich investors, banks and hedge funds that evade taxes by illegally shifting money to low-tax jurisdictions. There’s something particularly slimy about hedge fund tax dodging, given that they only pay a 15 percent federal tax rate no matter how much they make.

4. Front-running trades. With their high-speed trading systems and algorithms that sense ever so slight market moves, the biggest hedge funds and banks are able to trade just a fraction of a second before the rest of us do. The SEC is also worried that brokers leak information about large trades by institutional investors to hedge funds so that favored hedge funds can pull off the trade just a split second sooner, thereby earning a quick, easy, and illegal profit.

5. Late Trading. When Eliot Spitzer was New York Attorney General (and earned the handle, “Sheriff of Wall Street”), he uncovered hedge funds maneuvering around trading rules like a Ferrari speeding around the hapless shmoes stuck in midtown traffic. In violation of all rules, hedge funds were allowed by mutual fund managers to jump in and out of mutual funds many more times than normal investors, enabling them to score high returns at the expense of regular mutual fund customers. They even got away with booking trades hours after the market closed for the day—a real perk, since market-moving announcements often are made right after closing.

6. Accounting Irregularities. Boring stuff, but the stuff of big money. Hedge funds and banks cook the books to avoid showing losses and to artificially inflate profits. Hedge funds are also deeply involved in helping other companies—like Enron and WorldCom—bend their books. According to a study by Bing Liang at the University of Massachusetts, as of 2004, 35 percent of all hedge funds cited no dates for their last audit. Hmmm.

7. Setting up bets that can’t fail. I just can’t get enough of how banks and hedge funds collude to rig securities so that they are designed to fail. The best part is that in order to win their negative bets, they have to market the securities to chumps as if they were pure gold. This ploy always seems to involve a big investment bank and a hedge fund. You have Goldman Sach’s dancing with Paulson and Company, and then there’s JP Morgan Chase doing a two-step with Megatar.

Bank of America has agreed to pay $410 million to settle a lawsuit in which the lender is accused of manipulating debit transactions to maximize overdraft fees. The agreement is believed to be the first financial settlement by a large bank in a case alleging deceptive overdraft practices. It may presage the outcome of related claims against 30 other lending institutions, including Wells Fargo, Citibank, Chase, Union Bank and U.S. Bank.

San Francisco’s Wells Fargo is embroiled in a separate lawsuit in federal court in San Francisco brought by California customers. That case started before the multistate legal action, but has not concluded because Wells has filed an appeal.

In August, U.S. District Judge William Alsup issued a scathing ruling ordering Wells Fargo to pay its California clients $203 million. He said the bank’s goal was to “maximize the number of overdrafts and squeeze as much as possible” out of customers.

The crux of the claims against all the banks is that they processed debit transactions from largest to smallest, instead of the order in which they occurred, depleting accounts faster and boosting the number of overdrafts, which cost as much as $35 per transaction.

America has been waiting for a case to bring against Wall Street. Here it is, and the evidence has been gift-wrapped and left at the doorstep of federal prosecutors, evidence that doesn’t leave much doubt: Goldman Sachs should stand trial.

To date, there has been only one successful prosecution of a financial big fish from the mortgage bubble, and that was Lee Farkas, a Florida lender who was just convicted on a smorgasbord of fraud charges and now faces life in prison. But Farkas, sadly, is just an exception proving the rule: Like Bernie Madoff, his comically excessive crime spree (which involved such lunacies as kiting checks to his own bank and selling loans that didn’t exist) was almost completely unconnected to the systematic corruption that led to the crisis.

But Goldman, as the Levin report makes clear, remains an ascendant company precisely because it used its canny perception of an upcoming disaster (one which it helped create, incidentally) as an opportunity to enrich itself, not only at the expense of clients but ultimately, through the bailouts and the collateral damage of the wrecked economy, at the expense of society. The bank seemed to count on the unwillingness or inability of federal regulators to stop them — and when called to Washington last year to explain their behavior, Goldman executives brazenly misled Congress, apparently confident that their perjury would carry no serious consequences.

Defenders of Goldman have been quick to insist that while the bank may have had a few ethical slips here and there, its only real offense was being too good at making money. We now know, unequivocally, that this is bullshit. If the evidence in the Levin report is ignored, then Goldman will have achieved a kind of corrupt-enterprise nirvana. Caught, but still free: above the law.

In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC’s inspector general described the program’s regulatory army: “The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office.”

Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman’s CEO at the time. And in exchange for “submitting” to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.

In 2004, in an extraordinary sequence of regulatory rollbacks that helped pave the way for the financial crisis, the top five investment banks — Goldman, Merrill Lynch, Morgan Stanley, Lehman Brothers and Bear Stearns — persuaded the government to create a new, voluntary approach to regulation called Consolidated Supervised Entities. CSE was the soft touch to end all soft touches. Here is how the SEC’s inspector general described the program’s regulatory army: “The Office of CSE Inspections has only two staff in Washington and five staff in the New York regional office.”

Among the bankers who helped convince the SEC to go for this ludicrous program was Hank Paulson, Goldman’s CEO at the time. And in exchange for “submitting” to this new, voluntary regime of law enforcement, Goldman and other banks won the right to lend in virtually unlimited amounts, regardless of their cash reserves — a move that fueled the catastrophe of 2008, when banks like Bear and Merrill were lending out 35 dollars for every one in their vaults.

Read the rest at Rolling Stone.

Photo: RMajouji (CC)

A Hated Financial Center Is Bouncing Back. How Did They Do It?

Two years ago as financial reform was put on the U.S. Congressional agenda, a skeptical Senator, Dick Durbin of Illinois, spoke of the power of the banks over the country’s legislative process.

“They run the place,” he said matter of factly.

The comment was then treated as a sidebar in the few newspapers that carried it, perhaps because it hinted at how interests, not ideology, dictate what happens on Capitol Hill.

The remark about a shadowy power structure far more important than all the partisan in-fighting that dominates the news is worth recalling as a way of explaining how little has been done to rain in Wall Street in the years since its crash virtually wrecked the global economy.

It is also worth realizing that the people who “run the place” usually do so in ways that rarely get high profile media scrutiny or even public attention.

During the deliberations on re-regulating banks, they mounted a formidable army of lobbyists. It was reported that there was a many as 25 industry lobbyists were assigned to each member of Congress.

Even as new laws passed to satisfy an angry public, the industry dominated the process of what the laws would cover and how.

They also spread money around to helped politicians that helped them For years, those donations were made on a non-partisan base with Democrats as well as Republicans a beneficiary of carefully targeted help.  Today, they are cutting off the Democrats who pushed financial reform.

The corporate sector is following suit. Nominally “liberal” companies like BP, criticized by the White House sharply for the Gulf Oil spill is pouring money not oil, into GOP coffers.

As bi-partisanship fades, and certain ideological lines are drawn more sharply, the bankers are now favoring the Republicans financially, perhaps to thank them for erecting a unified wall against tighter rules for banks.

The GOP, led by the pro-free market slogans of the Tea Party are busy  defunding regulators as well.

Right-wingers in turn are being funded by wealthy billionaire backers including the shadowy Koch Brothers responsible for backing the anti union programs of Governors like Scott Walker in Wisconsin. These campaigns are designed to neuter all opposition to a conservative agenda.

Meanwhile, President Obama reaches into the corporate sector for “help” on his economic “recovery” agenda. In recent months, he named Jeffrey R. Immelt, President of General Electric, a company known for outsourcing jobs as his jobs adviser.

He plucked William Daley from the American Chamber of Commerce to become his Chief of Staff.

Daley recently scolded politicians for calling for the prosecution of Wall Street criminals.  He said that job belongs to producers in Hollywood, not lawmakers.

These efforts have emboldened other arms of Wall Street to intervene in politics. The most visible last week was the statement by the ratings agency Standard and Poors that it was revising the country’s credit rating as “negative,” warning that will consider lowering the long term rating of the United States “within two years”

Many stocks fell, but bond markets ignored it. Former International Monetary Fund economist Simon Johnson raised questions about their decision of a kind absent in most media outlets.

Writing on his website Baseline Scenario, he noted that few outlets pointed out how inaccurate the ratings agencies had been at the height of the crisis, and how irresponsibly they hyped worthless bonds packed with sub prime junk. Yet once again they were treated as credible despite sloppy analysis.

“The main problem is that S&P did not lay out even the most basic numbers or even point readers towards the nonpartisan and definitive Congressional Budget Office analysis of medium- and longer-term budget issues.   This matters, because the CBO numbers definitely do not show debt exploding upwards immediately from today…”

Bloggers like Cannonfire go further arguing that,

“The revised credit rating is meant to push the administration and lawmakers into going after Social Security and Medicare. The right-wing now has an additional propaganda tool to push for draconian cuts in areas that will most hurt working and middle class Americans.

Here’s the kicker: Standard and Poors and Moody’s are private firms. They don’t work for the United States; they serve the interest of Wall Street banks. 2008 taught us that they are completely unaccountable.”

Doug Smith adds on the influential Naked Capitalism blog that Wall Street should know that joining the Tea Party Jihad on government spending will be counterproductive for economic recovery.

“We know the bankers control both parties and are immune from any threats to their bonuses or their liberty. Still, even on the bankers’ own terms of extend-and-pretend, these cuts are idiotic”

Despite all of its frauds and deceptions, Wall Street has bought its way out of the many pressures that it change its ways.  In a special issue. New York Magazine concludes that in this economic war, “Wall Street Won.”

Their editors write,

“In the political realm, Wall Street faced the prospect of root-and-branch re-regulation, up to and including the potential nationalization of the industry’s largest players, and in the cultural realm its transfiguration into a kind of pariah state. Once upon a time, the Street’s leading lights had been glamorized and admired to the point of worship; now the likes of Robert Rubin, Lloyd Blankfein, and Richard Fuld were relentlessly pilloried and demonized….

Yet today on Wall Street, all of that seems a very long time ago. Not only are the banks rolling in dough again, but their denizens’ customs and sense of self-esteem have largely reverted to the status quo ante.”

A retired, well-known journalist, James Clay Miller, notes that media coverage of these issues adds to the confusion because it is often superficial and misleading.

“Corporate media refuse to tell many of the stories of bank fraud, as they decline to tell many of the stories that would show the public the corporate takeover of government, but the facts are available to those who recognize that they won’t learn much of importance from CNN.”

The public is not just uninformed; it is unorganized on these issues and not fighting back. The power of the bank lobby can be compared to the pro-Israel lobby in the sense it dominates the discourse on this issue.

With a besieged Democratic administration siding with the banks, unions and activists may not be willing or able to challenge Wall Street. They are so desperate to hold on to the White House, they seem willing to pull any potential punches to make Wall Street a target.

Only a national high profile and populist campaign will be able to stop the financial industry from consolidating its clout. The banks are banking on their ability to stop such a campaign before it starts or gains any traction.

News Dissector Danny Schechter made the film, Plunder: The Crime of Our Time, about the financial crisis as a crime story.

And, lest you think the whole idea is tongue-in-cheek, there are tons of real-world examples of successful alternate currencies right now for inspiration: Ithaca HOURS (used in Ithaca, NY), World of Warcraft money, BitCoin, and Japan’s Fureai Kippu, or “friendship tickets”:

Here’s a nightmare scenario shared by some mainstream investors, goldbugs and Ron Paul devotees: The year is 2013. Inflation has the U.S. economy in a stranglehold. International investors are fleeing to the far corners of the globe. The dollar is in a free fall, and Americans are scurrying to protect their wealth. What do you do?

Start your own currency. It’s not as complicated as it sounds. You can “back” it with gold, or mimic an I.O.U. for one hour’s worth of work. All you need is a system other people can understand and, most importantly, trust.

No gold? No problem. The easiest way to start a currency is to draw up an I.O.U. system that allows your friends to trade hours of work.
Hundreds of shops in Ithaca, NY, accept “Ithaca HOURs,” a local currency backed, not by gold, but by man-hours.

MIRA MESA — California man upset with his bank for disallowing his requested refinance said he decided to pay off his $6,500 credit card bill entirely with pennies.

Thierry Cahez of San Diego County rolled 650,000 pennies in plastic, loaded them into crates and drove the lot to his Mira Mesa bank, KABC-TV, Los Angeles, reported.

Cahez was turned away by the bank several times but eventually was sent to a branch with a vault large enough to handle the coins.

Cahez said he opted to pay his credit card bill with pennies because he was turned down for a refinance and for the amount of charges and fees on his credit card, KABC-TV said Tuesday.

For more information, see original article.

There is no common definition of what a tax haven is. Everybody has a slightly different definition. Ultimately what a tax haven provides is escape from the rules and the laws of jurisdictions. Tax havens are also about ‘elsewhere’ – the laws of the Cayman Islands are not designed for the benefit of the 50,000-odd population of the Cayman Islands.

The traditional view is…palm-fringed tropical islands in the Caribbean, Monaco, Switzerland, Liechtenstein. Small states. But if you do the analysis of what a tax haven is and what they are selling, you will find that these small islands are generally sideshows to the big event. The biggest tax havens in the modern global economy are big OECD rich country economies – the United States, the United Kingdom, Switzerland.

The pervasiveness of this stereotype has been one of the great reasons why the offshore system has been invisible. People have always thought of tax havens as sideshows to the main event, whereas in fact they are central to the global economy.

The drug trade makes heavy use of the offshore system. The money now involved is so large that you can’t transport it in suitcases anymore. A suitcase can only hold around $1-2 million, and we are now talking about tens and hundreds of millions of dollars. In terms of the overall scale of what is happening offshore there are various different estimates.

Once again, the Xtranormal.com platform is being put to good use to elucidate exactly what’s happening:

Each segment has information that I found useful, especially the fact that there is actually no physical silver left in circulation — nice touch. Part II is here and part III available here.

Part IV is here, and after the creators accidentally deleting the original voices, the bear in the overalls is now sounding strangely like John Lennon.

Another source of information and a more detailed breakdown on basic market manipulation and arbitrage is available here. The site that appears to be the sponsor/creators of the Xtranormal videos silvergoldsilver.blogspot.com is less clear, but has information as well.

Lastly, the folks at Stand for Delivery have created a site dedicated to demanding delivery of their physical silver purchases, to in effect call the larger bluff of the market, if in fact there is a bluff occuring.

To my untrained financial brain, this is difficult to follow, but on the surface is seems like a likely scenario — it’s simply a different flavor of Ponzi scheme that is dovetailing with the desire for many to remove the “volatility” of the dollar (i.e. make it easier to manipulate) and move towards a a new federal or global currency, depending on who you are listening to.

Not such a wild scenario if you trace the de-evolution of the financial marketplace in a time where the new economy manufactures nothing, creates nothing and builds nothing — the new market only manipulates financials or other investors in order to generate revenue for long enough to avoid detection and then move on to the next area of vulnerability. “That’s called trading” you say — yes, but in the past even if you were burned by a more skilled trader, you would still have the physical performance of the company to rely on an even minimal performance or return — the change is that now we are rendering entire market segments into obsolescence by focusing only on 100% speculative market manipulations.

Remember the coming Biotech stock bubble? Turns out those were too complex to inflate and raid, which is why that cycle of hyperinflation never “caught on”.

If you have more knowledge of this topic, please sound off in the comments, everyone could benefit from as much trained knowledge as possible on this one.

France, as current head of the Group of 20 countries, will help the transition to a global financial system based on ’several international currencies’, French Economy Minister Christine Lagarde said today.

Lagarde, speaking ahead of a G20 finance ministers meeting in Paris on Friday and Saturday, said the world had to move on from the ‘non-monetary system’ it now has to one ‘based on several international currencies’.

Accordingly, France wants to see less need for countries, especially the emerging economies, to accumulate huge foreign reserves, she said.

At the same time, international capital flows should be better regulated and the role of the Special Drawing Rights issued by the International Monetary Fund should be reinforced by the inclusion of China’s yuan in the system.

China, whose booming economy now ranks second only to the US in size after overtaking Japan, has accumulated massive forex reserves of more than $2.5 trillion on the back of its sustained trade surpluses and foreign fund inflows.

Washington says the build-up reflects an unfair undervaluation of the yuan, a charge Beijing rejects.

France has previously said it wanted to see the global financial system reduce its reliance on the dollar for a more broad-based arrangement.

It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people — mostly children — couldn’t afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it “a silent mass murder”, entirely due to “man-made actions.”

Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis as if they had been struck by a tsunami. “My children stopped growing,” a woman my age called Abiba Getaneh, told me. “I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died.”

Most of the explanations we were given at the time have turned out to be false. It didn’t happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn’t because demand grew either: as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand actually fell by 3 per cent. Other factors — like the rise of biofuels, and the spike in the oil price — made a contribution, but they aren’t enough on their own to explain such a violent shift.

To understand the biggest cause, you have to plough through some concepts that will make your head ache — but not half as much as they made the poor world’s stomachs ache.

Read more here.

P.S.  I would like to offer a ’special’ TBA prize to the first Dystopia Diaries reader who detects the even more disturbing trend vis-a-vis crude oil prices and CPU within the workook data.  Hint:  Can you say “Peak Oil?”

Footnote
*Yeah, it’s true.  By giving yet another extraordinary tax cut to the finance-addled trust fund brats, Obama and the Republican’ts are throwing away 80% of those dollars’ productivity.  See the analytical graph and supporting details here.

Contributed from Dystopia Diaries

Our economy doesn’t need to print more money.  The economy must have had about $1.5 TRILLION more money at the end of 2010 than it started with.  What we need to do is make the banksters and uber-rich pay their fair share and stop glomming off old age pensioners.

Details available upon request.  Or check it out for yourself here.

If you liked this, or better yet, if you hated this, check out my ‘Policy Directions‘ page at Dystopia Diaries.

Margaret Thatcher famously outraged the left by asserting there was no such thing as society. Perhaps today would be a good moment for David Cameron to flummox rightwing orthodoxy by declaring there is no such thing as “the market”. This mythical creature has been credited with playing a key role in events of the last few days. The market was unhappy with uncertainty. The market doesn’t like coalition government. The market didn’t want to hang around and wait.

Television news crews were even dispatched down to the City of London to try to doorstep this grumpy beast, standing outside empty office blocks hoping to catch a glimpse.

The reality, as ever, is more complicated. There are markets, but many of them, all with buyers and sellers expressing necessarily contradictory opinions on where things are going.

Some of these markets have indeed shown clear reactions to the political turmoil. The foreign exchange market, for example, has seen the value of sterling rise and fall in inverse relation to Labour’s fortunes: the pound fell against the dollar when it looked possible that Gordon Brown’s departure might allow a deal with the Lib Dems, only to rise again when this receded in favour of a Tory-led coalition.

The market in government debt, or gilts, experienced a similarly bumpy ride. But those speculating this might be the start of a long-feared “strike” by disenchanted investors were somewhat let down: a regular government debt auction at the height of the political confusion was twice oversubscribed.

More importantly, all this drama was captured in a surprisingly narrow trading range. As of this evening, sterling is back where it was yesterday lunchtime, which is roughly where it was on Friday. All the intervening ups and downs have moved cable – the forex term for dollar/sterling rates, not the recanonised Vince – by a total of four cents, taking this vitally important yardstick all the way back to where it stood, er, a year ago.

The most volatile and widely quoted market index, the stock market’s FTSE 100, was perhaps the least useful in assessing what was going on. This list of big British shares is actually stuffed full of foreign companies and multinationals and is consequently much more sensitive to global economic conditions than what happens in Westminster. Just as yesterday’s huge rally was driven by the eurozone rescue, it would be wrong to read much into today’s sell-off other than a few people getting overexcited the day before.

But this is also a good day to puncture the equally specious argument that circulates at times like this suggesting we shouldn’t pay too much attention to what goes on in these confusing corners of finance.

Read more here.

Wall Street pay is on pace to break a record high for a second consecutive year, according to a report in Tuesday’s Wall Street Journal.

Some three dozen top banks and securities firms will pay $144 billion in salary and benefits this year, the paper said. That’s a 4 percent increase from the $139 billion paid out in 2009, according to a survey conducted by the Journal. Compensation is expected to rise at 26 of the 35 firms surveyed, including banks, investment banks, hedge funds, money-management firms and securities exchanges.

Large Wall Street banks are unlikely to accelerate bonus payouts, however, to help their employees avoid the higher tax rates that may be coming when tax cuts enacted by the Bush administration expire on January 1.

Image: World Development Movement (WDM)

Katie Allen writes in the Guardian:

Financial speculators have come under renewed fire from anti-poverty campaigners for their bets on food prices, blamed for raising the costs of goods such as coffee and chocolate and threatening the livelihoods of farmers in developing countries.

The World Development Movement (WDM) will issue a damning report on the growing role of hedge funds and banks in the commodities markets in recent years, during which time cocoa prices have more than doubled, energy prices have soared and coffee has fluctuated dramatically.

The charity’s demands for the British financial watchdog to follow the US in cracking down on such speculation comes against a backdrop of cocoa prices jumping to a 33-year high as it emerged that a London hedge fund had snapped up a large part of the world’s stock of beans. On Friday, traders say, Armajaro took delivery of 240,100 tonnes of cocoa — the biggest from London’s Liffe exchange in 14 years and equal to about 7% of annual global production, according to the Financial Times.

Read More: Guardian

Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.

“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” says Jeffrey Sloman, the federal prosecutor who handled the case.

“It’s the banks laundering money for the cartels that finances the tragedy,” says Martin Woods, director of Wachovia’s anti-money-laundering unit in London from 2006 to 2009. Woods says he quit the bank in disgust after executives ignored his documentation that drug dealers were funneling money through Wachovia’s branch network.

“If you don’t see the correlation between the money laundering by banks and the 22,000 people killed in Mexico, you’re missing the point,” Woods says.

More than a year and a half after Iceland’s major banks failed, all but sinking the country’s economy, police have begun rounding up a number of top bankers while other former executives and owners face a two-billion-dollar lawsuit.

On Wednesday, the administrators of Glitnir’s liquidation announced they had filed a two-billion-dollar (1.6-billion-euro) lawsuit in a New York court against former large shareholders and executives for alleged fraud.

Four former Kaupthing executives, who all live in Luxembourg, have meanwhile been arrested in Iceland in the past week and Interpol has issued an international arrest warrant for that bank’s ex-chairman, Sigurdur Einarsson.

Former head of the bank’s domestic operations, Ingolfur Helgason, and former chief risk officer Steingrimur Karason were arrested late Monday on arrival from Luxembourg, just days after former Kaupthing boss Hreidar Mar Sigurdsson, along with Magnus Gudmunsson, who headed the bank’s unit in Luxembourg, were taken into custody.

An employee of Sydney’s Macquarie Bank probably isn’t in line for a fat payrise after he was caught on live TV closely analysing something a bit more scintillating than the Lucky Country’s interest rates:

According to net experts, at least one of the photos in question is Orlando Bloom’s squeeze Miranda Kerr. The Victoria’s Secret Angel is a local lass made good, and is rarely seen dressed in more than her underwear, which makes her the pin-up of choice among Sydney’s hardened bankers.

Consumer reporters were all crowing about a 79.99% rate credit card that was launched in response to credit reform a few months ago–collectively horrified that a law designed to cut rates and eliminate sneaky fees was inspiring increasingly abusive bank behavior.

I thought that was about as bad as it gets until I took a close look at the statement for my new Macy’s card, which I had opened with “instant credit” while Christmas shopping. It made that 79% card look like a bargain.

Department Stores National Bank, which issues the card, charges a “minimum interest charge.” On my average daily balance of $3.41, that minimum charge worked out to “an actual annual percentage rate” of 703.80%. (Part of the impact of last year’s credit reform is that the issuer had to disclose that shocker on the statement, while also noting that the card’s normal APR is 24.5%.)

Such are sneaky new fees that are now springing up in response to the Credit Card Accountability, Responsibility and Disclosure Act passed last May, said Bill Hardekopf, president of LowCards.com, a rate-shopping web site.

“We are going to see a lot of creative new charges, especially in the area of fees,” he predicted. “The CARD Act tied issuers hands in some areas, but they are going to be looking for all sorts of creative new ways to make up the revenue that they lost.

Read More on CBS Moneywatch