Archive for the Fraud Category

HSBC documents reveal criminal conspiracy of banks and governments [World Socialist Website]

Posted in Bill Clinton, France, Fraud, Obama, Switzerland, U.K., US Government Cover-up, USA on February 22, 2015 by Zuo Shou / 左手
By Andre Damon
11 February 2015

…international news outlets the Guardian and Le Monde, working with the International Consortium of Investigative Journalists (ICIJ), published articles based on their analysis of leaked files showing that the Swiss private banking arm of HSBC, Europe’s largest bank, functioned for years as a tax evasion and money laundering firm.

The company ran a branch that gave out “bricks” of hundreds of thousands of dollars in cash in foreign denominations and provided its wealthy clientele with advice on how to commit tax fraud, according to the reports.

These facts have for years been been in the possession of international financial regulators and governments throughout the world—including those of Britain, France and the United States—which systematically covered them up.  Neither the bank, nor its executives, nor any of the clients that utilized its tax dodging services have been criminally prosecuted.

No one should believe that HSBC is an aberration; there is no doubt that similar practices are carried out by all major international financial institutions. The HSBC files have unearthed a cesspool of corruption, criminality, bribery and collusion that pervades the entire capitalist system and the governments that defend it.

The HSBC revelations are only the latest in a series of scandals involving virtually every major financial institution.  These have included the selling of fraudulent subprime mortgage-backed securities, illegal foreclosures, commodities fraud and the manipulation of LIBOR and international foreign exchange benchmarks.

HSBC was one of the institutions whose greed and lawlessness plunged the world into a crisis in 2008 from which it has never recovered, cost millions of people their jobs and launched a wave of austerity all over the world involving the slashing of workers wages’ and social benefits.

The list of people who used HSBC’s services include corporate executives, fundraisers and major donors to American, British and Australian political parties, and politicians from at least 17 countries, including Britain.

The trail of dirty money reaches as high as former US President Bill Clinton.  British business tycoon Richard Caring, who once picked up more than five million Swiss francs in cash from the bank, donated $1 million to Clinton’s foundation from his Swiss bank account.

The report by the ICIJ notes that the month before Caring made his donation, he “funded a champagne and caviar extravaganza at Catherine the Great’s Winter Palace in St. Petersburg, Russia, flying in 450 guests to be entertained by Sir Elton John and Tina Turner and addressed by Bill Clinton.”

It also notes that Charles Barrington Goode, a major fundraiser for the Liberal Party and chairman of ANZ bank, one of Australia’s largest financial institutions, held an account with the bank under a false name for three decades.

In addition to “legitimate” businessmen and high-ranking politicians, HSBC’s services were used by drug kingpins, weapons smugglers and traffickers in illegal “blood diamonds.”  Reviewing the reports, it is impossible to determine where the criminal underworld ends and the ruling class of bankers and corporate CEOs and their millionaire political front-men begins.

While no bank executives or wealthy clients have been prosecuted, the one person out of this morass of criminality who faces serious legal consequences is the whistleblower who exposed them.

In 2009, an HSBC technical employee named Hervé Falciani came to realize that HSBC’s private bank was operating a huge tax evasion operation, and began collecting information to provide to Swiss authorities, which showed no interest.

He subsequently turned files pointing to tax fraud by some 130,000 people over to the French police, who shared them with other governments, including that of Britain and America.  Falciani has since been charged with violating Switzerland’s bank secrecy laws and carrying out industrial espionage.

In 2010, then-French Minister of Finance Christine Lagarde provided a list of 2,000 suspected tax evaders to the Greek government, and the list subsequently came into the possession of Greek magazine publishers, who printed it.  They were subsequently charged, then found not guilty, of breaching privacy laws.

A portion of the files accumulated by Falciani were recently obtained by Le Monde and shared with the ICIJ and other newspapers. The files cover some 30,000 accounts holding nearly $120 billion in assets.

In the UK, more than 3,000 people have been investigated based on Falciani’s files, but the government has brought no charges against any of them.

Perhaps the biggest cover-up has been carried out in the United States, where in 2012 the Justice Department agreed to a $1.2 billion “deferred prosecution” settlement with HSBC on charges of money laundering for Mexican drug cartels, never mentioning the fact that the US government had evidence the bank helped its clients evade taxes.

One of the leading architects of the settlement with HSBC, Loretta Lynch, at that time the US attorney for the Eastern District of New York, is now the Obama administration’s nominee to replace Eric Holder as attorney general.  The Reverend Lord Stephen Green, HSBC’s chief executive during the period covered by the files, was subsequently appointed the UK’s minister of state for trade and investment…

Excerpted; full article link:


Related article about HSBC’s bogus  ‘prosecution’ by the US gov’t for laundering Mexican drug money:

“Outrageous HSBC Settlement Proves the Drug War is a Joke” [Rolling Stone] by Matt Taibbi  —


Obama administration’s phony crackdown on the banks [World Socialist Website]

Posted in Capitalism crisis early 21st century, Early 21st Century global capitalist financial crisis' US origins, Fraud, Obama, USA, Wall Street on May 16, 2014 by Zuo Shou / 左手

By Gabriel Black
9 May 2014

The US Department of Justice (DOJ) posted a video Monday in which Attorney General Eric Holder sought to dismiss the widely held, and completely justified, belief that the Obama administration treats the major American banks and financial institutions as being above the law. Various newspapers report that the video will be followed by a decision by the DOJ to criminally prosecute two foreign banks for crimes unrelated to the financial crisis.

The video and the likely prosecutions are disingenuous PR moves designed to give the public the impression that the Obama administration is tough on the banks. However, this transparent attempt at cover-up and deception is undermined by the reported decision to target only foreign, not US-based, banks.

In fact, by going after Credit Suisse Group AG and BNP Paribas SA, the Obama administration is compounding its refusal to prosecute American Wall Street bankers for their criminality and fraud by attacking their overseas rivals.

Holder begins his video by declaring: “There is no such thing as too big to jail.” He goes on to state that “some have used that phrase to describe the theory that certain financial institutions, even if they engage in criminal misconduct, should be considered immune to prosecution, due to their sheer size and influence in the economy.”

It is unclear, when Holder refers to “some,” if he is referring to himself. In March of 2013, Holder, responding to questioning from Republican Senator Chuck Grassley, who noted that there had been no criminal prosecutions of financial institutions or executives by the Obama administration, said: “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them, when we are hit with indications that if we do prosecute — if we do bring a criminal charge — it will have a negative impact on the national economy, perhaps even the world economy…”

Holder’s testimony before Congress amounted to an admission that the US government does, indeed, consider big US banks and their top executives to be “above the law,” and deliberately avoids prosecuting them for illegal activities…

Excerpted; full article link:

Why Aren’t Big Bankers in Jail? [FAIR]

Posted in Capitalism crisis early 21st century, Corporate Media Critique, Early 21st Century global capitalist financial crisis' US origins, Economic crisis & decline, Fraud, USA, Wall Street on January 22, 2014 by Zuo Shou / 左手

– Why ask why, say their enablers in financial press –

By Janine Jackson

Jan 1, 2014

The man in charge of a bank that engaged in massive mortgage fraud chatted with a corporate media host (CNBC Squawk on the Street, 7/12/13) about the fact that virtually none of those who enriched themselves while eviscerating the life savings of many blameless people, derailing the US economy along the way, have faced criminal prosecution:

Jim Cramer: Shouldn’t they have indicted somebody who actually did bad things in banking?

JPMorgan Chase CEO Jamie Dimon: I think if someone did something wrong, they should go to jail.

Cramer: Well, who did? Who went to jail?

Dimon: One of the great things about America, failure is not illegal or wrong. You can’t just say it failed. But I do think America looked at the crisis—and this is too bad—and there was no, anywhere, Old Testament justice. What they saw is people got overpaid—and some of these people lost all their money, their reputation, all that. If someone did something wrong, they should pay. You’ve got to be specific. Did they do something wrong, or you just don’t like the fact that they failed? You make investments. They don’t always pay off. It doesn’t mean you’re a criminal.

Cramer: Right.

Granted, Cramer is no one’s idea of a serious interrogator of the financial system (FAIR Blog, 3/13/09). But much journalism on the question of criminal prosecution of industry leaders amounts to similar apologia…

Full article link:

The 2012 US Presidential “Non-election”: Which Brand of “Fascism” this Time? []

Posted in Afghanistan, Bourgeois parliamentary democracy, CIA, Corporate Media Critique, Fascism, Fraud, Iran, Iraq, Obama, Pentagon, Romney, Syria, US imperialism, USA, Wall Street on October 23, 2012 by Zuo Shou / 左手

* No matter who “wins”, humanity loses. *
By Larry Chin
October 14, 2012

Every four years, the deck chairs of the political Titanic that is the American empire get rearranged in the choreographed spectacle of another presidential “election”. The 2012 charade is particularly disgusting; the lies more blatant and shrill, as the world continues to burn.

It is critical to focus on the cold, ugly reality facing the world with either prospective White House occupant.

On one side, the Obama administration, and the traditional brand of neoliberal imperialism and international consensus, and false domestic populism. On the other side with Mitt Romney and Paul Ryan, militant right-wing extremism, an apocalyptic war agenda and the politics of sadism at home.

The interests of the elite (Council on Foreign Relations, Bilderberger, etc.) is dutifully served with either Obama or Romney in the White House. The question for the elite is purely over style and execution.

Obama has been a servile facilitator and protector of the political establishment; an insidious capitulator and “consensus man”. For Wall Street’s billionaires, the Pentagon’s warmongers, and Washington’s most shamelessly corrupt, there has been no greater gift than Obama and his presidency. But with Romney and Ryan, the agenda simply speeds up and destroys faster, more violently, with true theocratic maniacal fervor.

The final choice will not be made by voters (who will be disenfranchised again, via electronic vote fraud and other manipulations), but by the criminal elements who seize final control of the apparatus over the final month of the “contest”.

The “children” are being allowed to fight it out amongst themselves. The side with ultimate command of the corporate media propaganda, the most effective back door deals, and the most effective dirty tricks and election night shenanigans, will prevail, the pre-determined result promptly encrypted into the software of controlled Diebold voting machines.

* The Debate Charade *

It is tempting but futile to dissect the theatrics of the debates, which are based on entirely on false premises to begin with. Not one exhaustively argued “talking point” addresses realities.

The carefully pre-selected issues assume a host of falsehoods, from the legitimacy of the wars in Iraq and Afghanistan, and the destabilizations of Iran and Syria, to the need for fiscal austerity.

These are rhetorical dog-and-pony shows without real differences, beyond timing, style, and method, by which they will execute similar agendas.

Both sides largely agree on foreign policy. Both sides proudly trumpet how best to inflict crippling economic warfare on “nuclear Iran”, and topple Syria. The only argument is whether the sequential multinational stranglehold (“diplomacy”) led by the Obama administration continues apace, or, if Romney/Ryan and the right will get what they really want: an all-out war with Iran.

Both sides agree on the same falsehoods regarding the national debt (without mentioning that the world war that they enthusiastically wage is the main expenditure) and the US financial crisis (ignoring the fact that the financial “crisis” and “bailout” was a manipulation that centralized the power for Wall Street constituents, the big banks, who support both sides equally, at the expense of US taxpayers). In terms of social programs (that will be cut in any case in order to pay for more war), the Romney/Ryan contingent calls for an immediate destruction of the entire social structure of the US—a swift draconian end to social programs such as Medicare and Social Security—while the Obama administration takes a more gradual approach.

Essentially, the candidates have already admitted that they do not serve the interests of most of humanity.

The media “analysis” of the election has been stomach-turning— nothing more than insanity heaped atop insanity. The chattering of talking heads over infantile nonsense, such as “who looks presidential”, who got more “gotchas” and “zingers”. A dumbed-down spectacle for a dumbed-down, manipulated populace…

… * Romney/Ryan: Bush/Cheney on Steroids *

To know what a Romney/Ryan presidency promises, simply consider some of the dangerous ultra-hawk war criminals and unsavory individuals who are advising the ticket.

Its team of foreign policy advisers is a wall to wall cast of Bush/Cheney war criminals:

Dan Senor- former leader of the Iraq provisional authority

Cofer Black-former CIA official, vice chairman of Blackwater USA

John Bolton- former Bush/Cheney US ambassador

Eliot Cohen- Project for New American Century (PNAC), Dick Cheney aide

Walid Phares- “scholar” on “anti-terrorism”; Lebanese Christian with ties to violent Lebanese militia

Michael Hayden- Bush/Cheney CIA and NSA director

Max Boot- senior CFR fellow, PNAC

Eric Edelman- former Dick Cheney aide

The ticket’s economic advisers are led by the Paul Ryan himself, “Lyin’ Ryan” the destroyer, along with the following leftovers from Bush/Cheney:

Glenn Hubbard- Bush/Cheney council of economic advisors

Gregory Mankiw- Bush/Cheney council of economic advisors

Vin Weber- lobbyist, former Republican member of Congress

Jim Talent- lobbyist connected to Jack Abramoff

Kevin Hassett- former aide to Bush/Cheney

This list speaks for itself, as does “Etch-a-Sketch” Romney’s background as a Wall Street manipulator and “Lyin” Ryan’s fanaticism. Expect saber-rattling, violent rhetoric, rabid attacks against nations from those in the Arab world to China and Russia, and irrational behavior to blossom in the weeks ahead.

* Media Cheerleading *

Judging from the narrative that is being created out of the presidential and vice presidential debates so far, it is clear which side the establishment favors more. The right-wing elements dominate American society and its media. There is no “liberal media”. The right-wing also controls the voting machines.

The right-wing is foaming at the mouth for a Romney/Ryan Republican win. This explains why Romney and Ryan can do no wrong in any mainstream media coverage. They can say or do anything, tell any lie, while the Obama administration “loses—even when they “win”, and no matter what they attempt.

Romney and Ryan, and their minions, have spouted treasonous rhetoric, and have not been stopped.

This is identical to the astounding free passes that Ronald Reagan, George H.W. Bush, and George W. Bush received on their way to White House power. It is happening again.

* Which way to the abyss? *

There have never been real elections in contemporary America, and there will be no “election” this time either. There will, as always, be no real choice: war-mongering, mass-murdering imperialist “A” or war-mongering mass-murdering imperialist “B”.

America and the world must pay attention to which brand of fascism will ultimately be chosen, if only to properly prepare for what is to come. The marginal differences in method and style have ramifications, domestically and globally.

The quelling of increasingly large swaths of humanity is more important to the elite than ever before. The next White House occupant will spearhead the likely UN and NATO regime changes for Syria and Iran, both of which have been systematically destabilized by the CIA and its affiliates, and the “reconstruction” of the American social net.

Will it be more of the fist inside the velvet glove, or the hammer directly to the skull?

No matter who “wins”, humanity loses.

Full article link:

Excerpted by Zuo Shou

Revealing study of “revolving door” between US government and big business [World Socialist Website]

Posted in Bourgeois parliamentary democracy, Early 21st Century global capitalist financial crisis' US origins, Economic crisis & decline, Fraud, George W. Bush, Obama, Pentagon, USA, Wall Street on October 15, 2012 by Zuo Shou / 左手

by Nick Barrickman
8 October 2012


A recent study by Swiss economists Simon Luechinger and Christoph Moser, The Value of the Revolving Door: Political Appointees and the Stock Market, takes a detailed look at the intimate relations between the US government and big business. In particular, Luechinger and Moser track the gain in the stock price of defense firms whose executives shuffle between the private and public sectors.

The authors analyze stock market reactions to the announcements of political appointments in Washington over the course of six Republican and Democratic administrations. As they explain in an abstract of their work, “Using unique data on corporate affiliations and announcements of all Senate-confirmed U.S. Defense Department appointees of six administrations, we find positive abnormal returns for political appointments.”

Luechinger and Moser add, “We also find positive abnormal returns for corporate appointments. Our results suggest that conflicts of interest matter also in a country with strong institutions.”

None of this will come as a surprise to anyone who has the slightest acquaintance with the thoroughly corrupt American political system, nonetheless, the empirical corroboration has a certain value.

In describing the incentive for such corporate-government relations, the study points out that “conflicts of interest indeed matter,” and that “political appointees have both opportunities and motives to act in favor of their former employers.” Luechinger and Moser explain further on that “former political appointees are valuable because of their connections, access and clout … schmoozing government officials at all stages of the procurement process is essential for landing contracts.”

Focusing on the defense industry, due to its overwhelming weight in the federal budget, the study found that firms who saw their former executives appointed to government positions experienced an average stock bump of 0.82 percent and 0.84 percent “for the one- and two-day event windows, respectively.” This translates into a great deal of money.

Likewise, when erstwhile government officials took on corporate posts, the firms in question noticed a bump of between 0.79 and 1.05 percent. A corresponding dip in value could be seen upon the denial of a government office to a given firm’s executives. These gains and dips were not due to peripheral factors affecting the defense industry, the report made clear.

“It’s an incestuous business, what’s going on in terms of the defense contractors and the Pentagon,” said Senator Claire McCaskill (Missouri), in regard to one of the Obama administration’s appointments from this sector. Needless to say, this is simply grandstanding. The Bush administrations operated in precisely the same manner.

Apologists for the current system often point to the fact that former corporate executives are forced to divest their assets and recuse themselves from making decisions involving their old firms. However, again to absolutely no one’s surprise, the Swiss economists found that “despite numerous rules on the books, it is less clear to what extent they are actually enforced.” Senators may be tough in the initial hearings, the report says, but “political appointees are often successful in receiving waivers later on.”

Barack Obama’s former Deputy Secretary of Defense William J. Lynn III (2009-2011), now a lobbyist for defense giant Raytheon, provides an excellent example. Under Secretary Defense in the second Clinton administration (1997-2001), Lynn returned to the corporate sector, including a stint as senior vice president of Government Operations and Strategy for Raytheon, until being tapped by Obama.

At the confirmation hearing for his second cabinet post, Lynn was granted significant concessions from Congress in regard to making decisions on behalf of his former firm. In relation to the decision, Obama’s spokespeople were quoted as saying, “Even the toughest rules require reasonable exceptions.”

Significantly, the Luechinger-Moser study found that “stock market reactions tend to be higher for nominations … and for corporate appointments of former political appointees of a Democratic President.” So much for the claims about the Democrats as the party of the “little man.”

The virtual merger of the private sector with Washington officialdom of course goes far beyond the defense industry, and is glaringly illustrated as well in the case of government appointees associated with the financial sector.

One of the most notorious examples in recent times is former Goldman Sachs executive Henry Paulson, turned treasury secretary under George W. Bush. Goldman Sachs was deeply implicated in the illegal dealings that led to the 2007 collapse of the housing bubble and subsequent financial crash. Paulson, the bank’s former CEO, conveniently presided over the banking industry at this time.

In short, firms dependent one way or another on relations with the US government have every reason to expect a financial shot in the arm when one of their own is appointed to a top government post. The marriage of big business and government (collusion is too mild a word) has worked to help generate mega-profits for countless companies, while facilitating at the same time a massive shift in wealth away from the population.

The Luechinger-Moser report’s timid claim that the practices are attributable to “industry expertise” or “insider knowledge” hardly does the process justice.

Colossal disasters for the US and global population traceable directly to business-government incest are not simply of the financial variety, the 2010 Deep Horizon oil rig explosion being one of the starkest examples.

Article link:

As Barclays CEO resigns…Libor manipulation scandal engulfs 16 top banks [World Socialist Website]

Posted in Cameron, Capitalism crisis early 21st century, Economic crisis & decline, Fraud, Japan, U.K., USA, Wall Street on July 10, 2012 by Zuo Shou / 左手
By Christopher Marsden and Julie Hyland
4 July 2012

The Libor scandal, thus far focused on British-based Barclays bank, has revealed that global capitalism functions not as a free market, but as a rigged market controlled by contending groups of corporations, cartels and multi-billionaire speculators.

The sums involved in the manipulation of Libor (the London inter-bank lending rate) and its European equivalent, Euribor, are staggering. The most conservative estimate of the money accrued to the world’s top banks by these practices is £48 billion ($75 billion).

Libor and Euribor are two of the crucial mechanisms for setting interest rates on a vast array of financial products. Libor is the largest and most variable rate, covering ten currencies. It even helps determine the rate of the US dollar in the form of eurodollars.

Traders in London, New York, Japan and elsewhere colluded to manipulate the Libor rate so as to make massive profits or conceal losses, at the direct expense of pension funds and mortgage and loan holders.

These practices—involving what the British Financial Services Authority (FSA) admits were a “significant number of employees”—played a major role in determining the extent of the global financial crash of 2008.

A former Barclays executive who was close to the bank’s Libor-setting operation told the Financial Mail that the Libor mis-quotes “gave an illusion of stability and was a key factor in masking the severity of the crisis.”

A legal case in the United States is seeking damages of £70 billion ($110 billion) from Barclays and almost £80 billion ($126 billion) from the UK government-owned Royal Bank of Scotland (RBS)—figures far in excess of the banks’ market valuations.

This alone would make it the financial crime of the century.  Yet after investigations going back to 2007 in at least three countries, no one has been prosecuted. Instead, those responsible have earned millions upon millions.

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Folly of modern capitalism [Japan Times]

Posted in Capitalism crisis early 21st century, Early 21st Century global capitalist financial crisis' US origins, Fraud, U.K., USA, Wall Street on June 26, 2012 by Zuo Shou / 左手

Special to The Japan Times

HONG KONG — Greg Smith got more than his allotted 15 minutes of fame when he resigned from investment bank Goldman Sachs. In an op-ed article for The New York Times, he furiously blasted his employers as “toxic” and “morally bankrupt”, accusing them of ripping off their clients and calling them “Muppets”, British slang for stupid, besides referring to the television puppets.

It remains to be seen what impact the article will have on Goldman Sachs’ behavior…

Smith’s charges are also worth looking at in the much wider context of the contribution of banking and finance to the modern [sic] capitalist world.

Goldman Sachs saw $2.15 billion wiped off the value of its shares in the immediate aftermath of publication of Smith’s resignation. The article even added a few items of excitement to the infantile Twitter feed “GS elevator gossip.” Samples include:

“I bet Greg Smith doesn’t know s**t about ‘guy code’ either …

“Know the difference between a buy-side and a sell-side guy? The buy-side guy says ‘F**k you’ before they hang up the phone …

“Number one: I wish I invested in poverty. It’s up 60 percent since 2001. Number two: We did.”

The investment bank itself predictably denied Greg Smith’s accusations…

Matt Taibbi, in his classic Rolling Stone article, had surely already damned Goldman to hell for all eternity, describing Goldman Sachs as “a great vampire squid wrapped round the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Although other people had said similar things before, Smith was a Goldman insider and backed up his accusations by quitting his $500,000-a-year job. As an executive director in London, equivalent to a vice president in the United States, he was half way up the totem pole. He waited until after the bonus payouts had been made, and who knows what frustrations and arguments may have halted his journey up the greasy pole….

…Barry Ritholtz, head of Fusion IQ and author of the Big Picture blog, claimed that the move under which big financial firms changed from partnerships to publicly traded banks was a watershed: “Their priorities changed . Profits first: meeting quarterly profit estimates became job 1; everything else, including corporate culture, was secondary.”

He added that Goldman is not alone and unlikely to suffer a massive defection of clients. Where and to whom should unhappy clients run — “to the choirboys at Morgan Stanley, or to the philanthropic organization known as Deutsche Bank?” he asked, tongue clearly in cheek.

Goldman’s defenders included New York Mayor [and billionaire media mogul] Michael Bloomberg, who said it was “beyond me” why the New York Times had published the article. Blankfein was “trying to lead this firm at a time when God couldn’t lead it without being criticized.” It was not clear whether this was a conscious or unconscious reference to Blankfein’s claim, which he later withdrew, that he was “doing God’s work”.

Bloomberg echoed other defenders who claimed that the clients of Goldman and other investment banks are not little old ladies, but professionals who should be aware of the advice caveat emptor (let the buyer beware).

There are wider issues concerning the role of finance and financiers in the modern capitalist economy. In the blogosphere, a common term for the top bankers is now “banksters”, a portmanteau word combining “bankers” and “gangsters”.

Previously the financial system was regarded as the lifeblood of the capitalist system pumping blood — also known as money — through the system so the capitalist body could stay healthy and grow. Now finance has a life of its own… [See Marx’s “Capital” to rectify the author’s superficial suppositions – Zuo Shou]

…Ronald Reagan and Margaret Thatcher promoted a logical absurdity, he asserts: “That money, which is rules, can be deregulated. Capital can ‘flow freely’ as if it is water. This liquid should not be impeded by barriers if it is to reach its equilibrium point of maximum efficiency. It is rubbish, of course, but metaphors are extremely powerful, especially bad metaphors.”

Even more damagingly, Sell on News accuses, “The whole thing was scientized [sic]: the rules were manipulated by highly numerate rocket scientists (often literally out of NASA) who took the basic rules of money and created a massive edifice of meta-rules: rules based on rules based on rules. CDOs, CDSs, interest rate swaps, volatility indexes and now microsecond high-speed trading. It is this folly that is at the source of the recent crisis.” [Again, Marx would have a somewhat different analysis – ZS]

Such meta-money can only survive through massive leverage because the margins are so small, and those margins can be killed by small taxes, which is why Britain is so opposed to them.

Sell on News sees three different approaches to money, each based on a powerful currency, each with flaws:

• There is the dollar-based “English-speaking method of making returns from returns from returns.”

• There is the European approach, based on conventional banking and conventional bonds, meeting the cost of capital by making returns from debt, which now risks being mired in low growth because the demographics are poor [!?!].

• There is the Asian approach, seen in Japan and more recently in China [sic], which doesn’t believe in costs of capital or the discipline of capitalism, with massive investment and risks of cycles of excess and correction.

Sell on News concludes that the Asian way “is…perhaps preferable to letting meta-money purveyors run rampant playing Russian roulette with the world financial system as has been the case of the last decade and a half.”

Kevin Rafferty is editor in chief of PlainWords Media.

Edited / excerpted by Zuo Shou

Full article here: