Friday, May 11, 2012



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Obama's Gay Marriage Endorsement a Step in Evolution of American Identity

“I'm glad to see this in the business section, and this is a very good article. It is time the President recognized the world has changed. My grown daughters and son who is a neuro radiologist have helped me become a firm supporter of marriage equality, and sexual preference equality.

Equality for love should now be followed by equality for economic justice - which means putting the sociopathic greed of Wall Street Banks back into the carefully constructed cage of Glass-Steagall and the 1956 Banks Holding Co Act. Then apply the Sherman Act to ologopolistic/monopolistic health carriers; and correct the idea that is OK for many profitable big businesses to park profits and ship jobs offshore.

A majority of Americans is now better informed about the fact that marriage inequality is not fair. When Americans understand the root cause of this depression and vast chasm of economic inequality is the return of Social Darwinism metastasized into Financial Darwinism with the ethic of survival of the richest - we will be on a path to economic fairness.

To fix our society we need to establish a Doctrine of Fairness which extends to economic needs and wants. So we must protest against Financial Darwinism. The past is prologue - and the present provides exhaustive empirical evidence that the survival of the richest ethic controls Congress; motivates Wall St; interferes with regulators intervening, with our court system, and with the objectivity of the Fourth Estate.

To be better informed:”


There is a distinction between making something transparent and whether it should be made.

So Dodd-Frank and the Volker Rule have missed the real point – derivatives add no value to any sector of our economy except for fees going to the Godfathers who run the Wall Street Banks and the minions who serve their sociopathic greed. (The reality is that Greed belongs in a cage.)

Think about the admission of J. Dimon of JP Morgan-Chase yesterday - 2 billion dollars gone down the drain due to failed hedging.  Failed bets on synthetic portfolio derivatives.

Wall Street Banks are rolling the dice to hit target earnings numbers!  That's what is happening.  Betting on highly complex (too complex to explain) synthetic structured investments - based on the anticipated returns to be realized from egregious leveraged risk - conducted in a parallel synthetic financial universe.

Derivatives based on geometric leverage and a shard of virtual value must be outlawed, because the derivative “market” casino is nothing but a disingenuous roulette wheel. If you make a roulette wheel or a huge casino transparent – does this, in fact, lesson the systemic economic risk.

It is generally acknowledged there are SEVEN HUNDRED TRILLION DOLLARS OF DERIVATIVES. And this amount of geometric egregious leveraged phantom stuff to bet on is like a gargantuan Hydrogen Bomb looming over us. So what happens when it is no longer possible to lay off all the bets? Think Lehman and much worse.  And the government has dropped the ball on prosecuting financial fraud!

The essential myth of transparency is that the Volker Rule will empower the SEC to strengthen compliance and tighten risk measurement. And if the past is prologue this is a total misrepresentation about SEC resolve to be concerned with compliance regarding significant issues – as there are significant regulations in existence now that for the past 2 decades the SEC has specifically not enforced. Read my 1989 letter to J. Katz, Secretary of the SEC, in the appendix of How We Got Swindled – about how to better protect investors, which also warned about Financial Darwinism: zealot born again Social Darwinism with the ethic of – survival of the richest.

The SEC is supposed to administer Dodd-Frank and the Volker Rule?  Really?  Consider current SEC lack of dedication to the enforcement of current significant regulations. For example the absolute lack of meaningful collateral behind Collateralized Bonds has not been disclosed, thereby committing: inadequate disclosure - a grave violation of law. Which then becomes: the omission of significant information - which constitutes fraud.

The SEC has no problem with Credit Default Swaps; which were not initially regarded as derivatives, ie., something that could be traded. Swaps were designed to furnish the illusion that the financial risk of complex investments could be insured against. The Commodity Futures Modernization Act, drafted by lobbyists and Wall Street lawyers for Phil Graham, termed the risk insurance Credit Default Swaps to avoid regulation (go around) by state insurance commissioners - that probably would have disallowed them because there were no reserves, and insurance requires meaningful reserves. So these were sham “contracts” called insurance and were also used as collateral, ie., “swap backed.”

Financial markets trade anything that can be securitized, and specialize in the too complex to explain; hence market makers discovered the value of trading Swaps - bets on insurance being paid or not.  How can the risk of 700 trillion dollars of unmitigated toxic leverage be reserved for!  How can Swaps provide insurance?  How transparent is fabreezed manure?

A Vice President of FINRA in charge of one of the largest districts, when we discussed Swaps asked me - how can nothing be shorted? And added he had no mandate to stop the madness.

Transparency will not improve anything. Derivatives will remain a mystery to the buyers (and apparently to their creators) – which make them illegal based on one significant Fed Bank Holding Company Bank regulation (out of over 1,500 pages of regs) which stipulates: complex investments to be sold must be explained well enough to be understood! And the sellers, so intent on continuing their ability to make markets for liquidity to continue to sell and trade derivates for fees produced a 325 page document to ostensibly provide comments to the Volker Rule. How naïve is it to accept this?  From a friend of 20 years who is a senior officer with the SEC, I know that the SEC considers the 325 pages a position paper from lobbyists.

Anyone who really cares about fixing what has been so wrong must speak out against the ability to continue to fabricate (innovate), make markets for and trade derivatives. And I do not know anyone who is not connected with derivatives, who is a rational liberal concerned for the common good, with an appropriate economic and financial background over 50 - who does not share this opinion.

We know recovering drug addicts are against drugs - some spend a life time trying to help get people off drugs. So if this logic applies – would it not apply to anyone involved in derivatives in the past who decided it was wrong to contrive financial investments that only produced vast amounts of fees at the risk of entire economies? Is it naïve to expect that people who formerly made a living from such toxic, virtual stuff to bet on, who decided they could not take it anymore – should become leaders to stop the betting madness?

The real issue is not transparency. It is not to make an Everest sized roulette wheel transparent. It is to separate the banks from investment banks and stop Trojan Megan Bank Holding Companies by returning to Glass-Steagall and the 1956 Bank Holding Company Act. The real issue is to put greed back into a cage, and get rid of derivatives – which add nothing to capital formation.

Never believe the Street propaganda that derivatives help manage risk – all empirical evidence is to the contrary. Derivatives only create geometric economic systemic risk and geometric fees for the greediest – the past is prologue! Hedging is what you do when you know what you are about to do won’t work. (From How We Got Swindled)

It is self evident Wall Street wants to divert attention away from the real issues. So to debate/parse the most functional ways to put rules in place for Dodd-Frank and to improve the Volker Rule is the diversion that is working.

In the final analysis – the acceptance of this diversion is fueled by gullibility and naiveté. (And all the money in politics.)

If you want to know what Wall St and Congress don't want you to know: 


Speculators are at it again, and our President's response at the beginning of March was to ask AG Holder to "reconstitute" the oil speculation task force.

On March 9th Exxon's CEO Tillerson observed to Matt Lauer on the Today Show: "I don't see gas prices topping $5." Per usual, scapegoats are to blame - it's "political risk."

And everyone knows the annual traditional summer price gauging gas festival is fast approaching: so Big Oil can celebrate its voracious appetite for profit gluttony.

Have you felt the pain at the pump? Doesn't it feel like déjà-vu? Remember 2008 when all the most important oil execs and investment gurus proclaimed all sorts of reasons for the spike in crude going to about $150 per barrel. Of course, Congress was bewildered.

Where has the Commodities Future Trading Commission (CFTC) been?

Remember herds of oil tankers were discovered circling off shore from ports waiting for prices to go up before landing to unload. Why, because speculators had cornered the market on oil futures. And then retrospectively it was concluded the blame for the speculation was the "Enron Loophole" created by the Commodity Futures Modernization Act of January 2000 which allowed commodities to be traded outside the jurisdiction of the (CFTC), which meant that the trading of commodities was no longer regulated or subject to anyone knowing what was going on.

June 21, 2008 - the Secretary of Energy under Bush, Sam Boardman said (lied) -- "there is no evidence of speculation."

By Sept 2008, Bernie Sanders rescued the truth by providing leaked "confidential" data (probably considered proprietary by all the lying speculators and market makers) - that it was, indeed, speculation.

So there was a media outcry, and on May 22, 2009 the loophole was closed by attaching the legislation to close the loophole to Farm Bill HR 2419. And true to form Bush, ever a man of the people and hand holder of Saudi Royalty, vetoed it; however, it was passed by a veto override.

SEC. 13106 Portfolio Margining and Security Index Issuers gives authority to the Chairman of the Fed, the SEC and the CFTC to take appropriate action - (WHERE'S THE ACTION?). Think about this: Gary Gensler, the chairman of the commission, is a former Goldman Sachs Partner and responsible for oversight of oil speculation/commodity speculation as well as derivatives. The chairman of a regulatory commission should not need to be asked to become involved. So why must Justice get involved - because our regulator failed!

Why do so many regulators who formerly were either partners or CEOs of Goldman fail to protect us?And why would any President appoint anyone from Goldman considering all the empirical evidence of their consummate protection of the markets and not the public. The word market is code for Wall Street's self interest and sociopathic greed. Clearly our economy has been devastated by all the deregulated and unfettered unbridled greed - and oil prices are more of the same, unless you have faith in the analysis of Exxon's CEO.

Where is the SEC? Is it OK to manipulate markets? Don't think the Volker Rule will materially help! The SEC obviously has a mission to provide liquidity for market makers for traders to engage in making markets for unbridled speculation, ie., geometric volatility.

It must be OK to manipulate because innovated financial-structured investments - like 700 trillion dollars of derivatives now loom over us like a giant hydrogen (H Bomb) bomb! Silently waiting for one hiccup in the virtual surrealistic world of virtual values underneath an Everest sized inverted pyramid of 40 times the virtual value.

How is the Volker Rule going to help when will be administered by the SEC? The Rule fictitiously contends it will strengthen compliance and tighten (the fallacy of) risk management by math? What - better quantitative equations to measure the qualitative essence of subjective risk. The sure way to lower and measure risk is by having more cash and less leverage. But that's not what will happen and not what is happening.

The US is now exporting more oil than ever, and demand for gas is way down world-wide due to the 2nd worst economy in the US since 1776 - and even worse in so many other developed countries. Incomes and jobs are down, so consumers' ability to pay for gas, and heating oil, is lousy.

The media has not delved into the obvious nature of the speculation, but reports what others observe and stays away from the real issues. And where is the outrage from the American public? Is it believable that oil analysts, people paid by Wall Street to provide 3rd party influence to sell securities, are right this time - concern for political disruption, the price is fear-based? The role of the 4th Estate is to objectively create informed public opinion - and this has not been the case, although Americans seem to be oblivious of reality.

How can Gensler (the anointed fox) be in charge of protecting anyone other than his ex partners' best interests? Why has the CFTC not already curbed this new round of oil speculation! Come on! There is no reason for a task force, just have Justice investigate the CFTC.

Gensler formerly was a principal advisor to Robert Rubin, when Rubin was Goldman's CEO. Rubin, as Clinton's Treasury Secretary, petitioned Clinton to participate in deregulating greed and then joined Greenberg at Citi; and Gensler later served as Larry Summers chief advisor when Summers was with Goldman. Summers followed Rubin as Clinton's Treasury Secretary and was a staunch supporter of Greenspan and leading cheerleader for the deregulation of greed. Then Obama appointed Summers as his chief economic advisor - do you get this, I do not! And Gensler, as the Chairman of CFTC, will be instrumental in policing the Volker Rule - the commodity markets - aided and abetted by other commission members, some with conflicts and others who have only served in different governmental capacities - where is the Dali painting of this surrealistic model for failure? I would vote for Dali's painting titled, Persistence. (google it)

Romney thinks the free markets will resolve everything - let Detroit go bankrupt, let all the houses (homes) go into foreclosure, continue to innovate toxic derivatives - let the markets resolve these problems -- and he is the leading contender for the Republican nomination to run for president? While the media sits silently listening to the same market lies that led to our current economic disaster - which now cover up all the oil speculation.

So we can sleep better knowing it is not speculation and that H Bombs are not really financial. Who cares, lots of people still have money for gas and jobs, and so what if we prefer to not be informed. Or critically examine preposterous excuses and denials.

E. Henry Schoenberger, is the author of How We Got Swindled by Wall Street Godfathers, Greed & Social Darwinism ~ The 30-Year War Against the American Dream, with a foreword from David Satterfield, the former business editor of the Miami Herald, and 2 time Pulitzer Prize-winner.
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