tag:blogger.com,1999:blog-12839419906593097002024-03-13T18:12:37.941-04:00How We Got SwindledA blog about the context and substance of the history of the core issues, the events and culprits which caused our new Depression and vast chasm of economic inequality. And how the return of Social Darwinism has metastasized into Financial Darwinism - survival of the richest - the root cause.Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-1283941990659309700.post-66866164290828825082012-05-11T11:24:00.000-04:002012-05-11T11:39:11.260-04:00HuffPostComments <br />
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<strong><span style="font-family: Georgia, "Times New Roman", serif;">Obama's Gay Marriage Endorsement a Step in Evolution of American Identity </span></strong><br />
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<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">“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. </span><br />
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<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">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. </span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">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.</span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><br /></span><br />
<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;">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.</span><br />
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<span style="font-family: "Helvetica Neue", Arial, Helvetica, sans-serif;"><a href="http://www.howwegotswindled.com/">To be better informed: www.howwegotswindled.com”</a></span><br />
<br />Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-59513145266434152692012-05-11T11:21:00.000-04:002012-05-11T11:50:30.848-04:00FINANCIAL REFORM: TRANSPARENCY: OR CAGING GREED!<br />
<span style="font-family: Georgia, "Times New Roman", serif;"><strong>There is a distinction between making something transparent and whether it should be made. </strong></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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.)</span><br />
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<span style="font-family: Georgia;">Think about the admission of J. Dimon of JP Morgan-Chase yesterday - 2 billion dollars gone down the drain due to failed hedging. <strong>Failed bets on synthetic portfolio derivatives</strong>.</span><br />
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<span style="font-family: Georgia;"><strong>Wall Street Banks are rolling the dice to hit target earnings numbers!</strong> That's what is happening. Betting on highly complex (<em>too complex to explain</em>) synthetic structured investments - based on the anticipated returns to be realized from egregious leveraged risk - conducted in a parallel synthetic financial universe.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>Derivatives based on geometric leverage and a shard of virtual value must be outlawed,</strong> 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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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!</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>The SEC is supposed to administer Dodd-Frank and the Volker Rule? Really? </strong> 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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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.” </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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?</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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: <em>complex investments to be sold must</em> <em>be explained well enough to be understood</em>! 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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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? </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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)</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">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.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>In the final analysis – the acceptance of this diversion is fueled by gullibility and naiveté. (And all the money in politics.)</strong></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><a href="http://www.howwegotswindled.com/">If you want to know what Wall St and Congress don't want you to know:</a> </span>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-28285846563495211752012-05-11T11:00:00.000-04:002012-05-11T11:52:22.684-04:00PAIN AT THE PUMP: SPECULATORS? DUH!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.<br />
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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."<br />
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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. <br />
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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. <br />
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Where has the Commodities Future Trading Commission (CFTC) been?<br />
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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.<br />
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June 21, 2008 - the Secretary of Energy under Bush, Sam Boardman said (lied) -- "there is no evidence of speculation."<br />
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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.<br />
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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.<br />
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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! <br />
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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.<br />
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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. <br />
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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.<br />
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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.<br />
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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.<br />
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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.<br />
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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.<br />
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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)<br />
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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.<br />
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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.<br />
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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. <br />
<a href="http://www.howwegotswindled.com/">To know more about the failures of regulators:</a>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-90282960118897356602012-01-13T13:11:00.001-05:002012-05-11T11:54:16.837-04:00STRUCTURED INVESTMENTS: IT'S TIME TO PROTEST FOR REAL!Here we are in 2012 and Wall Street’s “structured investments’’ are still out of control. <strong>Unfettered free Markets reign!</strong><br />
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At a time when political candidates talk about the need for jobs and investment, Wall Street continues to focus on ensuring that its high-stakes poker games go unregulated. <br />
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The SEC defines structured investments under Rule 434 as: “Securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates of cash flows.”<br />
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No wonder structured investments are hard to control – nobody really understands them. But that didn’t stop people like MF Global’s Jon Corzine, Lehman’s Dick Fuld, and does not other Wall Streeters from manufacturing these investment “products” to produce revenue for their firms. Do product liability laws apply to these products?<br />
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<strong>Jefferson, in a letter to Albert Gallatin, Treasury Secretary in 1802, said: “<em>I believe that banking institutions are more dangerous to our liberties than standing armies.”</em></strong><br />
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Everyone should know something about what has happened to our economy and society stemming from all the too complex to explain exponentially leveraged “securities.” And the greed behind all the structuring is still going on without meaningful restraint as we enter a new year. At least Occupy Wall Street is persistently protesting in the shadows of the Wall Street glitzy office buildings.<br />
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Protest is the only way to change the essential inhumanity of so much greed. <strong>Plutarch said: <em>“An imbalance between rich and poor is the oldest and most common ailment of all Republics.”</em></strong><br />
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Occupy Wall Street has led the way to a new awareness of the feelings of betrayal and being left out of the American Dream caused by the drive to grow net worth by the few against the best interests of the many. Financial products such as structured investments do not lead to capital formation that is required to create jobs. <br />
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And in 2012 there is a need to have the right conversation about the right to produce structured investments that may have $600,000,000,000 of leveraged derivatives, which defy rational explanations, just waiting for a new hiccup to explode – or is it implode?<br />
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<strong>Wall Street was instrumental in the development of our country.</strong> Wall Street raised the capital for industrialists to invest in plant and equipment and innovative ideas which created the strongest economy of all time. It helped produce the middle class and could help to resurrect it if it had the will. Why could Wall Street not put risk capital into American manufacturing rather than geometrically leveraged virtual value? Why not stop all the leverage, which generates huge fees in the short run, but puts our entire economy on the line? <br />
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<strong>Why can’t Wall Street take the lead and make money the old fashioned way – not at the expense of the people but to rebuild the lives of the 99 percent. </strong><br />
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How can the Republican debaters’ and the media wonder how to rebuild trust? Trust in what – in a government that has failed to protect the public? Trust in banks that only care about structuring investments – so complex that the SEC definition is so arcane that only a few know what in the hell it could possibly mean?<br />
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<strong>Samuel Adams said: “<em>It does not take a majority to prevail…but rather a tireless minority keen on setting brushfires of freedom in the minds of men.”</em></strong><br />
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The Tea Party is an example of setting brush fires. However, its mission is to keep brush fires burning to obstruct passing the budget, or to avoid passing Obama’s jobs bill, or to get rid of health insurance for Americans who did not have access. These brush fires have been set to interfere with the freedom to care about the common good and our Government’s obligation to protect it. <br />
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Occupy Wall Street is a minority too. But its ethic is a function of restoring equality and fairness to the American Dream. We cannot allow unbridled, unfettered greed to permit the creation of “structured’’ financial products without investing in jobs or in capital formation. OWS certainly does not mean freedom for Congress to continue to be: of the lobbyists, for the ultra rich and by the ultra rich - who are the generals of the Mega Banks and the Corporations that ship jobs and profits off shore.<br />
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<strong>Jefferson noted: <em>“The legitimate powers of government extend only to such acts as are injurious to others.”</em></strong><em> </em>This was before germs, or automatic weapons, or nuclear bombs, or planes or the internet, or capitalism or 350 million Americans living on a globe with billions of people, connected to each other by laptops and facebook – and Huffington. So we need to view Jefferson’s profound concern for the public good in terms of today. We did manage to create the American Dream, but the deregulation of greed and the devaluation of ethics has become injurious to the 99 percent. <br />
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So now we have a new year, and a new election. And it is time to focus on the needs of the 99 percent and tear down party lines and obstructionist tactics. The truth is simple: It is time for all Americans to come together to understand that all the Greed and self interest is wrong. We need to fix it. <br />
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<strong>Congress along with Wall Street can step up to the line to do what is right for the people if there is a willingness to understand the reasons behind the brush fires, and go back to the basics that made our country great.</strong><br />
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<strong><a href="http://www.howwegotswindled.com/">TO KNOW WHAT WALL ST. AND CONGRESS DO NOT WANT YOU TO KNOW:</a></strong>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-44997786490880737152012-01-03T12:29:00.001-05:002012-05-11T11:56:17.329-04:00CAPITALISM: ACTING IN GOOD FAITH: CORZINE? LEHMAN AND THE COURT APPOINTED EXAMINER? OK BUNGEE JUMPING WITHOUT CORDS!<strong>How is a 6.3 “billion dollar bet” – “<em>prudent</em>?”</strong> That’s what Corzine testified. <br />
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He, “<em>always tried to do the right thing</em>;” he placed the bet to make money because IM Gobal needed to become profitable, he testified. So he bet the store on the direction of the currency of five countries. There was “<em>no intent</em>” to do the wrong thing – or misplace $1,200,000,000 of customer funds – it was just “chaotic.” No admission of anything that could be construed as fraudulent behavior – just the empirical evidence of reality.<br />
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Is this acting in good faith toward his fiduciary responsibility to customers? Let alone to his clear legal obligation to not co-mingle customer’s funds? Funds which probably went down the drain to cover his positions going the wrong way. <br />
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Corzine is only testifying to set up a fraud defense, because prosecutors must prove willful intent – and Corzine is a man of prudence, as a former CEO of Goldman. <br />
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So huge leveraged betting on currency is not intentional, and is the right thing to do? Hedge fund managers know currency bets are at the highest level of risk. Speculation is never prudent, but volatile. More leverage equals geometrically more risk and more volatility.<br />
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Capitalism is on trial because of the way it is practiced at the expense of prudent behavior, and because so many Capitalists do not act in good faith. <br />
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To Act in Good Faith is a legal term and concept well defined by many areas of the law and established precedent. Simply put - it is an implied covenant of fair dealing and not breaking (keeping) your word. Significant SEC and Fed Bank Holding Company regulations stipulate the legal import and requirement to Act In Good Faith – which must be adhered to as significant regulations have the force of law behind them.<br />
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<strong>So where has acting in Good Faith gone?</strong><br />
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The Lehman Bankruptcy in September of 2008 was the largest ever in US history. The Federal Bankruptcy Court just approved a plan to emerge from chapter 11 for 65 billion dollars, but the fighting for assets and valuations is not over.<br />
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Lehman leveraged itself to death, and when the market hit the fan on September 8, 2008, by the 10th it was clear that Lehman could not sell – flip all the egregiously leveraged and worse than junk bond debt it assumed it could always sell – no matter what? <br />
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Different suitors stepped forward to ostensibly buy or bail out Lehman. However, it became clear Lehman had manipulated an accounting of financial risks, replete with fictitious valuations through Hudson Castle, an entity set up to get the bad stuff off Lehman’s balance sheet. So with a myriad of other material issues – Lehman declared bankruptcy. The stock price now hovers at .025 cents.<br />
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Lehman Brothers did not practice Good Faith. And the Federal Bankruptcy Judge appointed an attorney from a prominent legal securities defense firm as the court’s Examiner. <br />
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The Examiner’s lengthy report reads like a brief in defense of Lehman. Jenner and Block, where Anton R. Valukas, the court appointed “Examiner,” is a very senior partner with a high profile national public record of defending actions alleging “breach of fiduciary duty,” and “securities fraud.”<br />
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The Examiner’s report concluded: “…<em>there was insufficient evidence to support a colorable claim for breach of Fiduciary Duty regarding Lehman’s valuation errors (lies?) ... there was insufficient evidence that any Lehman officer acted with the</em> <em>necessary SCIENTER to impose liability</em>.” Further the report concluded that Lehman had a “license to fail.” Which “establishes a future precedent” according to the Center for Policy and Research. What an examiner, what a business builder for future securities defense work. <br />
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<strong>Scienter refers to intent or knowledge of wrong doing.</strong><br />
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Lehman advanced the ridiculous and implausible notion that when it doubled its risk from $300,000,000,000 to $630,000,000,000 the “<em><strong>630 Billion</strong></em>" was still <em>“<strong>acceptable risk</strong></em>;” because it was “<em><strong>prepared to lose $4,000,000,000</strong>”</em> instead of $2,200,000,000. <strong>Does this ring true? </strong><br />
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Because, Lehman was “prepared to lose” (not investors), the Examiner did not consider this as “reckless behavior.” OK then – unbridled, geometric leverage to speculate in nuclear volatility is not reckless. Thank God for an Examiner with enough uncommon sense to let Lehman off the hook because it was prepared!<br />
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In fairness to Lehman it had backed up its risk – hedged it! Hedged 40 times its fictitious net capital, or possibly a higher multiple, an even more specious posture toward acceptable. Don’t forget September 2008 marks a date in history when it became public knowledge, for the first time, that financial engineered risk management was a cruel joke and clearly did not work.<br />
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<strong>Hedging is what you do when you know what you are going to do won’t work.</strong><br />
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The Examiner’s extremely subjective value judgment (which read more like a legal defense) was: Lehman’s risk reword ratio was justifiable. Because the reward justified the risk – he concluded, “The rewards outweighed the risk.” And this conclusion from one of the most prominent security defense attorneys in the US establishes a precedent which could then be applied to any Bank Holding Company in the future that dies from gangrene due to a bowel explosion stemming from all their “manageable” and “worth it” mathematically risk measured, insane leverage.<br />
<br />
Here’s a taste of Lehman’s not fraudulent practices: more than doubling its balance sheet valuation of Archstone - 2 times above market value; CDOs (“collaterized debt obligations)– termed asset backed securities, backed with either Swaps or pools of worse than junk bond real estate loans – had no real collateral considering any financial standards for what constitutes acceptable collateral for any bank in the US; fallacious accounting and the lack of collateral was not disclosed to investors, a severe violation of disclosure regulations; and the glaring lack of disclosure constitutes the “omission of significant information.” Further the Examiner found that as the economic downturn worsened Lehman consistently flagrantly inflated the value of its assets; while it continued to grossly overstate its expected (projected) return on investments. So was this accidental – because it was not intentional, as the Examiner has to conclude to let Lehman off the hook.<br />
<br />
And Lehman was not alone in 2008 in their usual and customary business practices just described. But Paulson and Congress made certain that our government bailed out Goldman and its (investors) counter parties, along with the other culprits.<br />
<br />
The Examiner’s report was justified, because THE CENTER FOR POLICY RESEARCH furnished the 99% with an Oversight Report of 33 pages. This is a Seaton Hall Law School “think tank?” and Mark Denbeaux, the Law Prof in charge – “…could find no legal reason to charge Lehman with misconduct.” Of course, the Seaton lawyers pointed out that their opinion was, “Pursuant to the standard practice of the Center…” <br />
<br />
No legal reason: fallacious-fictitious risk management and fictitious valuations as policy. To disguise - conceal the true value of assets and the actual nature of unbridled purely speculative risk? No legal reason? How about the lack of disclosure and the omission of significant information!<br />
<br />
There have been a number of articles recently on these findings and the emergence of Lehman from chapter 11. It is amazing how the ability to conduct critical thinking regarding the issuance of reports and legal conclusions is apparently missing in action. Acceptance of so called experts is what got us into this mess. Acceptance of Econ PhDs return to Laissez-faire theories designed to promote fees for the ultra rich rather than sanity and fairness is still the rule. <br />
<br />
To Act in Good Faith is missing in action. As well as any critical analysis of so-called “risk management.”<br />
<br />
It is not logical to mathematically measure risk because risk is subjective and qualitative; therefore can not be quantified. The Examiner supported the gravitas of virtual mathematical risk measurement by noting and seemingly condemning – “…Lehman valued these investments through gut feelings.” And their guts (based on greed) regarding unmitigated leverage were legally justified because they (Lehman) - “were prepared to lose.”<br />
<br />
And<strong> Corzine testified his “bets were prudent.” Just like bungee jumping without a cord. </strong><br />
<br />
<strong>The inscription on the tombstone of our devastated economy and the middle class should read – The rewards outweighed the risks. To Act in Good Faith is DEAD!</strong><br />
<br />
<a href="http://www.howwegotswindled.com/">KNOW WHAT CONGRESS AND WALL ST WON'T TELL YOU:</a>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-86093402686936600852012-01-03T12:21:00.000-05:002012-01-03T12:21:53.303-05:00WALL STREET: FINANCIAL INVESTMENT VS REAL: IS CAPITALISM BROKEN?The stock market formerly was a place where savings were invested in corporate growth except for times in the past, like the events leading up to the Great Depression - when unbridled speculatio and greed ruled. Many corporations, still alive today, were started by Wall Street Financiers.<br />
<br />
Financiers helped innovators like Thomas Edison and Henry Ford obtain the capital they needed to build their companies and sold stock to raise capital. Shareholders understood why they were investing and knew there were risks that could not be guaranteed. Shareholders accepted risk investing in ideas or men who had ideas – which if successful would result in expanding companies which produced products in demand, and the companies along with their stock price, and dividends would grow in value.<br />
<br />
So the Stock Market used to be a market which raised money for and sold shares in new companies or was a market to trade in existing investments called securities - which could be either bonds or stock.<br />
<br />
<strong>And the process works when investment is real rather than financial.</strong> <br />
<br />
Real investment produces improved, more productive, and more innovative plant and equipment which lead to increased GNP. Real is different than financial, because financial investment may only be reflected by a larger or lower personal income or net worth which is not translated into economic growth.<br />
<br />
We have lived in a forward looking economy, and counted on the free market myth to push everything up. Personal savings for some time have not been invested in the growth of corporate values translated into dividends for shareholders. And corporate profits, for too many years, have not been invested in corporate growth, but have been paid out to CEOs and upper- level executives at an accelerated pace for the past thirty years, while necessary cash was borrowed. This equation works as long as everything goes forward, meaning up. So, as investments became more financial than real our markets turned into casinos where shareholders bet on the direction of stocks, or indexes, or anything that could be securitized to bet on.<br />
<br />
A similar misdirection of savings occurred in the late 1920s when the stock market soared and “investors” gobbled up stocks on margin (LEVERAGE) in order to have a larger- than-life position in the market while stock prices soared due to unbridled greed and unfettered speculation.<br />
<br />
When Wall Street’s stock market specializes primarily in complex (too complex to explain therefore too complex to understand) financial instruments, real investment is lost is the frenzy of an infinitely speculative, feverish and dogmatic pursuit to manufacture fees and bonuses.<br />
<br />
The stock market is now for the benefit of Wall Street Godfathers, who have little concern for what happens to investors’ savings except for the conversion which has taken place for many years – the conversion of investor savings into Wall Street Godfather family pockets.<br />
<br />
<br />
<strong>Clearly - capital formation has been replaced by fee formation.</strong> And “financial masturbation” reigns supreme. This is a concept I raised in Invest for Success...which holds that masturbation is OK as long as you do not want to create anything real, but if you expect to achieve real financial results of substance in the future then it is not the right approach, and as I observed in 1990: “If the stock market becomes an arena of financial masturbation, then our economy suffers, as real investment is lost in the mad scramble to shuffle dollars.”<br />
<br />
<br />
<strong>All the firewalls are gone</strong>. <strong>Wall Street achieved a great victory at the expense of our economy and the financial lives of</strong> <strong>millions of Americans</strong>. Banks were the cohorts of Wall Street in the 20s and since 1999 (aided and abetted by Congress) have been joined at the hip again.<br />
<br />
Shortly before the book’s publication the OWS Movement began. It is not against Capitalism, but against how the misuse of Capitalism has caused so much financial displacement and anguish. Adam Smith, author of “The Wealth of Nations and a professor of Philosophy , postulated that Capitalism was supposed to be of benefit to society as a by product of a Free Market economy. However, the freedom has clearly been abused, because unfettered Greed knows no boundaries.<br />
<br />
<strong>So is capitalism broken? This is self-evident.</strong> <br />
<br />
Answers to correct the misdirection of capital from real investments to nothing but egregiously leveraged financial innovation to produce “structured investments” for fees are known. If Congress has the will and we the people vote out all who do not get it.<br />
<br />
Our Government must find the will and integrity to rebuild the barriers against Greed by separating the banks from the investment banks; by restricting the ability to form bank holding companies (which results in down sizing) and the will to require banks to be lenders again, and disallow the ability for any bank to issue (to contrive is illegal) complex instruments.<br />
<br />
<strong>Occupy has started the right conversation</strong>. And there is a growing of fear of this desperately needed conversation and of OWS. which will not go away. And the reasons should be clear to anyone who cares about truth and the common Good and truth. For Wall Street it is the fear of losing their money machine; for Congress losing the hands that feeds, and for Big Business losing the ability to feed Congress.<br />
<br />
<strong>For anyone that cares about the common good there is nothing to fear.</strong><br />
<br />
Excerpts from: <strong><em>How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War</em> <em>Against</em></strong><em> <strong>the American Dream</strong></em>; foreword by David Satterfield former business editor of the Miami Herald, 2 times Pulitzer Prize winner. To know more: www.howwegotswindled.comHenry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-26039500139583448982011-12-01T05:10:00.006-05:002011-12-01T05:27:57.057-05:00MACED BY WALL STREET BANKS: FOR 99% LIFE STINGS<div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">Public universities: another casualty in the War Against the American Dream.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">California has raised tuition precipitously since 2008. And the college students, children of the middle aged 99% are trapped in student loans and the doubling cost of education without jobs waiting at the end of the tunnel.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">So there has been unrest on all the California campuses for some time. UC Davis was the final straw in a cauldron of unrest that has been brewing. However, this cauldron, even seething volcano of hurt has manifested itself as passive assemblies of students trying to bring their fundamental problem of getting educated to light in a world that has turned away. </span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"> Can the Chancellor merely apologize? And the two policemen whose pictures are forever indelibly ingrained in the minds of all who care, can they merely be suspended with pay? Is assault still illegal?</span><br />
<br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">How has the betrayal of California students been addressed? How have all the justifiable feelings of not being able to deal with the growing weight of student loans been responded to? With controls established by California “Chancellors of Education” to keep the unrest at bay; to keep the peaceful assemblies dispersed so no one will know. </span></div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"> </span></div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">And Campus police in true SS style have now responded to orders by spraying mace/pepper spray - sprayed directly in the face of what could have been your child – pepper sprayed all over peaceful human living bodies quietly sitting, arms locked in a field. </span></div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"> </span></div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">Orange is the color of the newest level of the war. And Clockwork Orange is no longer in the future just like 1984 foreshadowed GOP Doublespeak.</span></b></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">Don’t think it was only the two deranged campus policemen who were at fault. Just like it was not only the child molester at fault on Penn State’s storied football coaching team. The two deranged robotic sprayers were surrounded by their uniformed brethren who did nothing to protect students being maliciously attacked. Just like so many at Penn State sat quietly on the sidelines because the Penn State tradition of college football greatness was more important than lives of a few kids.</span><br />
<br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"> Until the Occupy Movement, started by our newest generation of college students, the conversation in this (our) country was about “deficit reduction” and we can’t tax the “job creators” along with the validity of our President’s birth certificate and country of birth – and of course the sacred pledge to Grover! </span><br />
<br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">If the barriers against greed had not been torn down; if the SEC and the Fed had enforced regulations against fraud and against “complex financial instruments” too complex too explain – would California have run out of funding for some of the best and least expensive public universities in the country? If Congress had not courted the lobbyists and done its job to protect the public would we now be concerned for how we are now on the road to a police state where <b>the 1<sup>st</sup> Amendment is being violated everyday on television by mayors and armies of riot police – and now campus police. </b>I thought police were to protect the public, just like Congress.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">So now there is a new Rodney King moment in California, and in cities around the United States of America riot police are more concerned about containing valid American Protests – than arresting the perps watching from their glitzy towers of ultra wealth. We have seen bloodied students in NYC and young women clubbed, sprayed in the face and dragged who have been engaged in peaceful protests. Grandmothers shoved around, protesting the lack of jobs and 45,000,000 Americans below the poverty line. Something that does not resonate in the Hamptons, and is not covered in Town and Country.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">An awareness of the fact that most of us are the 99% is spreading which has caused the big banks to start a $1,000,000 fund to fight back against the movement, as reported, ironically, by Bloomberg. Bloomberg also reported that it found out, by persistent digging, that the Fed has given banks an extra 1.2 trillion dollars over the last few years – and not just American banks. Being the mayor of NYC is not simple but Wall Street rules.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">The dots are beginning to come together.</span></b></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">The Super Committee failed. And on Monday, Jon Kyl, a leading GOP humanitarian, told Carol Costello on CNN – “that Grover was not happy” the Repubs had agreed to increase (?) taxes to try to look like they were more interested in the country than in getting rid of Obama, by doing nothing about our depression. But the taxes were not for incomes above $500,000 or even above $1,000,000, because Kyl so brilliantly reasoned, that would be against the “job creators.” I applaud Carol Costello for being among the few to push a GOP spinner to the wall, but am still waiting for someone to skewer a member of the GOP Groverspeak group by simply asking – <b style="mso-bidi-font-weight: normal;">where is there one shard of evidence that lowering taxes has produced jobs, or that taxing incomes of $1,000,000 could kill job creation? The job killing lie is no different than the trickle down one.</b></span></div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"><br />
</span></div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">All the abuses of the 99% are related. And orange spray makes it crystal clear how little concern there is for how badly life stings for so many trapped in lives canceled by the return to Social Darwinism which has morphed into Financial Darwinism.</span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"> </span></div><div class="MsoNormal"><b style="mso-bidi-font-weight: normal;"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">So this year Thanksgiving will not be the same and the red and green of Christmas has been replaced by orange. </span></b></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><i style="mso-bidi-font-style: normal;"><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;">E. Henry Schoenberger is the author of How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream – with a foreword by David Satterfield, former business editor of the Miami Herald, 2 times Pulitzer Prize-winner. Schoenberger posts on Huffington Post -<a href="http://huffingtonpost.com/henry-schoenberger."></a><a href="http://www.huffingtonpost.com/henry-schoenberger">Henry Schoenberger </a>.To learn more: </span></i><span style="font-family: "Cambria","serif"; font-size: 12pt; line-height: 115%;"><a href="http://www.howwegotswindled.com/">www.howwegotswindled.com</a>. To buy the book: at Amazon's eStore: <a href="http://www.createspace.com/3710420">www.createspace.com/3710420</a></span></div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-88207772671940100052011-10-12T16:10:00.004-04:002011-11-26T11:38:34.385-05:00Occupy Wall Street Is Just The Beginning: The Battle Against Financial DarwinismFor new posts go to: <a href="http://www.huffingtonpost.com/henry-schoenberger">www.huffingtonpost.com/henry-schoenberger</a> - also search E Henry on Huffington for my bio, comments and list of posts.<br />
<br />
MY NEW BOOK ----<br />
<br />
<strong><em>HOW WE GOT SWINDLED BY WALL STREET GODFATHERS, GREED & FINANCIAL DARWINISM ~ THE 30-YEAR WAR AGAINST THE AMERICAN DREAM - including a foreword by Davie Satterfield, the former businsess editor, 2 time Pulitzer Prize-winner -</em> Is now available:</strong><br />
<br />
<strong>In soft cover directly from - Amazon's eStore: <a href="http://www.createspace.com/3710420">www.createspace.com/3710420</a> and other outlets.</strong><br />
<br />
<strong>In eBook format from - Amazon; B&N; Apple; Sony</strong><br />
<br />
<strong>To know more about the book: <a href="http://www.howwegotswindled.com/">http://www.howwegotswindled.com/</a> </strong>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-25315886135141801202011-09-10T12:26:00.008-04:002011-09-10T12:46:06.093-04:00Double Dip or Is the Remission Over?Double Dip is the new question. And Recession is the term applied to a depression different than the Great one; although, upon close analysis, our Great Recession has far more characterics of a Depression than the less threatening word.<br />
<br />
Entitlement is another word that is a misnomer, because we pay for social security, medicare - and medicaid has the ability to take all of our assets after a 2 or 4 year stint in a nursing home on the way to an end that would be considered inhumane treatment for a pet.<br />
<br />
So we do not use language correctly to elicit thought, because it is used as propoganda to shape thought. And the blame for this is a broken political system stemming from Republicans being against making sense no matter what, a faltering public educational process and an individual lack of responsiblity to know more and listen for meaning rather than salavate from ringing bells or electric shock. As well as Republicans and Democrats more concerned with "Special Interests" than our interests!!<br />
<br />
David Brooks of the New York Times told us today that most economists believe we should combine near term stimulus with long term austerity. These are the same economists that did not speak out against the Free Market self corrects based on the Rational Market Theory, which is the notion that markets which are nothing but a bunch of people buying stuff are rational - because Man is rational? And almost all of these economists (certainly not Krugman) have still not spoken out against the Free Market Myth as it still exists politically and on Wall Street.<br />
<br />
What if our Great Recession, a term used to separate our current state of malaise from all past recessions, is similar to a stage 2 or 3 melanoma, and the concern about double dipping is actually a lack of recognition that the remission is over.<br />
<br />
Over because we still have not applied the tools available to actually treat it?<br />
<br />
There is abundant empirical evidence from how the Great Depression was finally oblated - and the regulations necessary to curb greed have been destroyed and there is no talk of restoring the barriers. <br />
<br />
In 2009 Obama proposed a 2nd stimulus, based on economics that worked in the aftermath of 1929. And everyone should know that today's Republicans, led by leading Tea Party brilliant laissez-faire thinkers, have been against anything that makes sense since Bush. So let's remember - that God forbid Republicans to increase taxes on incomes above $500,000 or to stop billions of dollars for oil companies that have the largest profits in the world, which are now at record levels!<br />
<br />
The plan proposed by Obama was certainly limited by what the Republicans would not do. Therefore to acheive some immediate relief for so many who suffer without jobs and hope, a limited (but bolder than anticipated) plan was vehemantly proposed. <br />
<br />
<strong>And now the concern for a "Double Dip" is more than a concern - it is a probability because cancer does not just go away. Not that the creationists have reason to believe in medication. Let's join together to speak in tongue, maybe that will work.</strong>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-73220197781642176842011-09-04T14:29:00.006-04:002011-09-04T15:01:31.600-04:00WHERE HAS THE PUBLIC GOOD GONE?<div style="text-align: justify;"><strong>Republicans have declared war on the United States Government</strong>, and campaign against the government as the enemy. Today all the Republicans who have declared they are running for the presidency agree that the new financial regulations need to be removed; that the modicum of health "reform" must be overturned; social security should be privatized; and that corporate taxes should be lowered and taxes on the uber riche should not be raised.</div><br />
<div style="text-align: justify;">The financial reform did not happen; the health reform stopped far short of what it ought to be; if social security (which is not an entitlement because we pay for it out of our income) had been privatized it would have been ravaged by the Wall Street meltdown; corporate taxes as a percentage of GNP are at the lowest level since 1947 - and it is self evident that the Financial Darwinists must pay a fairer share of taxes!</div><div style="text-align: justify;"><br />
<strong>Americans need to wake up and get involved with searching for and identifying the fact of Financial Darwinism</strong> - which means the survival of the richest.<br />
<br />
Our media needs to stop providing a platform for people who want to argue the world is flat, and start asking pointedly tough questions following up all the ludicrous stuff that the self interested spout off on their news shows. Too much talk about the contest and not much on whether a runner can or should run the country. Politics might be fun for the media to analyze ad nauseum, but it has been a lethal passtime at the expense of our society.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;"> The media needs to stop being an enabler and remember it is supposed to objectively promote the creation of objective and informed public opinion. And this does not happen when an economist supports more deregulation, like this morning on Meet the Press! Both sides is the Fox Views equation of R. Murdock - not the obligation of The Fourth Estate!<br />
<br />
Walter Cronkite did not come back from Viet Nam to tell his fellow Americans how wrong the war was, and then have a distorted defense of the war from a self interested general trying to salvage his job and reputation on the CBS evening news to provide balance. The networks are no longer independant enough to allow blunt political and economic truths on network evening news. NBC does allow it on cable, so deserves credit.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">So, although Jefferson said the role of government is to protect the public - all the right wing nuts who are so concerned about the US Constitution do not care what the guy thought who wrote it! And they talk about Reagan like he did not increase the size of government as if he walked on water and is still as much alive as Elvis. Ask his son, who is an extremely objective and vehement about the truth commentator.</div><div style="text-align: justify;"><br />
</div><div style="text-align: justify;">Regulations are to protect the public good, and our economy and society have gone down the tubes of all the deregulation.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-10974768440878266002011-08-03T13:29:00.001-04:002011-08-03T13:38:45.203-04:00there is a stainthere is a stain<br />
on the conscience<br />
of my country,<br />
and it is <br />
breaking so many<br />
lives into shards<br />
of tragedy<br />
<br />
there are millions<br />
of us without...<br />
jobs and savings<br />
(and without...<br />
enough food<br />
to have hope,<br />
while too many<br />
don't care<br />
<br />
there are politicians<br />
who vote against<br />
anything for neighbors<br />
(and vote against<br />
everyone and everything<br />
that is not<br />
just like them<br />
<br />
prejudiced ignorance<br />
has overtaken - shredded<br />
the fabric of our<br />
democracy...<br />
while unbridled greed<br />
has disingenously spawned<br />
born again social darwinism<br />
<br />
(and once again<br />
our collective conscience<br />
is silent...Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-12938010128177424082011-07-27T16:14:00.010-04:002011-08-29T12:04:45.337-04:00Financial Darwinism is Born Again Social Darwinism<i>How We Got Swindled by Wall Street Godfathers, Greed and Financial Darwinism </i>now has a foreword written by David Satterfield, who has 2 Pulitzers and formerly was the Business Editor of the Miami Herald. In the foreword Satterfield points out that Financial Darwinism means - "survival of the richest," and you should remember the social variety was "survival of the fitest," according to Herbert Spencer the 19th century Brit philosopher who provided this core ethic which led to the Great Depression. <br />
<br />
For the past 30 years <i>survival of the richest </i>the core ethic of Financial Darwinism has been the driving force behind the deregulation of greed and the devaluation of ethics. And at the same time the ultra rich have created a support group of lobbotomized pawns culminating in the Tea Party (and a host of other Republicans) - who signed a pledge of allegiance to Norquist and have placed their pledge to him above their pledge of allegiance to the United States. So all the "Pledgers are even against raising taxes for incomes above $500,000 and apparently regard removing subsidies for big oil as raising taxes. Let's try to remember taxes are also revenue, and when so many jobs have vanished, many of them due to the survival of the richest ethic, tax from income is down and committments continue.<br />
<br />
There is, of course a way to decrease expenses - like unnecessary wars, and even unresponsive government programs, in addition to waste. But when middle class income has been flat for so many years and CEO income has geometrically gone through the roof there are glaring inequalities that have been manipulated into existence by the war being conducted by Financial Darwinists against the middle and upper middle class.<br />
<br />
So the conversation is now all about the deficit, and not how to grow jobs and the economy. And Americans do not really understand how we arrived at this point in time, because many have allowed themselves into being fooled that deregulation was to get the government off their back - nuts, because it gave the Financial Darwinists the freedom to operate without any restrictions to greed.<br />
<br />
Free market economics is back, which is one of the basic lies behind our financial devastion. Freddie and Fannie have been identified as the root cause of the 2008 meltdown, and "important" new books continue to focus on only a part of the whole. But none of the legitimate books contain the whole truth; and the not so legitimate books get published to appeal to Financial Darwinists and their pawns on the radical, finatical right. And the whole truth must be known and understood before we can move forward to properly correct the present to be on a more stable and fair path in the future.<br />
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It is so much easier to single out specific culprits as the root cause, but without an understanding of all the parts which add up to the whole of how we got swindled and are still getting our economy and society will not recover from decades of the undeclared war against most of us. And this war has been ratified by Congress because Congress voted a number of times to deregulate greed - and to decrease taxes unfairly; and to allow enormously profitable corporations to avoid being taxed; and to allow religion to seep into the state; and to support the withdrawal of support for public education, etc.<br />
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Republicans today are not Rockefeller, Eisenhower, or even Nixon. They are hell bent on getting their own way at the expence of the public good. When Swindled becomes available it will provide the missing link between public awareness and the understanding of why and how we reached this chasm of lies and self interest. If we really want to fix what has been so wrong we must begin by recognizing how we are at war.Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-29715112714050902882011-06-12T18:01:00.000-04:002011-06-12T18:01:55.538-04:00How We Got Swindled: Trade Groups Lobby Against "Too Big to Fail"<a href="http://howwegotswindled.blogspot.com/2011/06/trade-groups-lobby.html">How We Got Swindled: Trade Groups Lobby Against "Too Big to Fail"</a>; http:twitter./com/ehschoenberger: face book: Henry SchoenbergerHenry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-34823341542480387342011-06-12T17:11:00.005-04:002011-06-12T17:58:22.734-04:00Trade Groups Lobby Against "Too Big to Fail"Sunday morning, 6/12, the NY Times article "Too Big to Fail" once again addressed the fact that trade groups still lobby against any regulatory requirements for how much cash on hand, or equity behind all the leverage utilized to enhance profits, should be required. And true to form the regulators are going to study this.<br /><br />Not long ago, but well in the past leading up to our continuing Great Recession, banks were required to have legal reserves on hand to back up all their loans of our savings. And insurance companies were mostly mutuals, more concerned with protecting policy holders than with magnifying profits through the use of leverage based on assumptions that always projected a growth in values. Prudence was their good Sheppard. And this also predated the ability of banks, and insurance company banks to issue "complex securities. Further this was before insurance companies were allowed to invest outside of their core business, and banks were also not allowed to invest outside their core business - for example banks were not allowed to be in the insurance business.<br /><br />So there are 2 dozen, or more companies, that invest in banks and lending and issue insurance as well as hedge funds that do not want to be part of the too big to fail crowd. Mass Mutual is particularly adamant, however it is instructive to remember how many huge insurance companies failed in the past 10 years and in the past 20 years, as well as consider that Mass Mutual has grown so large by absorbing some of the best "old line" mutual companies that were on the edge of insolvency, like Connecticut Mutual "the Blue Chip Company." Hedge funds failed in the Great Recession, as well as mutual funds, even one that invested in CDs.<br /><br />We should just accept whatever these truly giant financial institutions say because they are so honest and interested in our well being - as long as they can continue to make too much money from too much leverage at our expense. We should believe the trade groups - nuts!<br /><br />Do not interpret this blog as being against Capitalism - just against Greed and bull shit, and all the regulators that do not and have not protected us from all the Greed.<br /><br />There are far better ways to approach protecting our economy from the greed of financial entities invloved in leveraged activities.Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-73423968992356212012011-04-30T17:20:00.013-04:002011-05-09T11:46:06.005-04:00We are still Getting swindled<div align="justify">I have changed the title of my book to - <em>How We Got Swindled by Wall Street Godfathers, Greed and Financial Darwinism (and are still Getting) </em>because the underlying causes have not really changed. And I have revised the book to make it historical and current - while Dave Satterfield, former business editor of the Miami Herald with 2 Pulitzers, is writing the forward, because he believes Swindled is "spot on." One way or another the book will be available in the near future.<br /><br />It seems that publishers to date have been either afraid of the whole truth and nothing but the truth, or not intellectually open enough to understand why the other books they have put on their lists are not what Americans really need to know to understand the pervasive depths of the swindle and why it is still taking place. I guess I need a PhD in economics before publishers will believe, or pay attention to the empirical evidence provided in<em> Swindled</em> which proves how wrong most of the economists have been for the last 30 years.<br /><br /><strong>Consider the current price of gas - is now over $4.00 per gallon</strong>, which one idiot on CNN pointed out - "is still much less than Europe." Of course she failed to note that taxes on gas in Europe make up the difference! So where is the reform and how are we protected by "transparancy" when <strong>the problem is</strong>, once again, <strong>profiteering by speculators</strong>. And the real question remains - should rapacious greedy speculation in an essential commodity be allowed; should it not at least be controlled? The last time this occurred the price per barrel was 40% higher, so i thought this problem was not supposed to happen again.<br /><br />However <strong>again Financial Darwinism has prevailed</strong> and the lie of "free market capitalism" still flourishes in a world of Laissez-faire survival of the fitest. The oil companies have said they are not making that much while their profits soar and supply is not materially down. And Thomas Jefferson's belief that "<em>the role of</em> <em>government is to protect the public</em>" has been relegated to our self-correcting markets based on the ludicrous notion that markets are rational.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com1tag:blogger.com,1999:blog-1283941990659309700.post-5103296619711605322010-10-30T10:41:00.004-04:002010-10-30T12:07:08.970-04:00The Audacity of Republican Lies<div align="justify">So here we are on the verge of a mid term election and the media (pundits) spends it's time speculating and joking about the probability of who will win. They love the "excitement" of the tote board election mentality. Is the Fourth Estate not charged with the responsibility to objectively create informed public opinion as a part of the political check and balance system established to protect Democracy?</div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify"></div><div align="justify">President Carter told Bill Mahr that he has never seen such a polarization of the United states, and the talking heads discuss how Obama will have to get along with Republicans. How do you get along with supposed fellow Americans who only want to get their power back to "reduce the size of government," and "lower taxes" for the highest income earners, because taxes have been lowered for everyone else? How do you establish a dialogue of understanding with people who lie about "death panels" and misrepresent economic realities by still arguing for the validity of: "trickle down," along with deregulation and the free enterprise, of self-correcting markets based on the postulate that the "market is rational?" How do you do this when our "Great Recession" was clearly caused by all of this and more. How do you objectively create informed public opinion by allowing all the liars to advertise their lies and by allowing all the secrete funding of campaigns as supported by the recent Supreme Court ruling? </div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify">And how does it make sense to be so against any improvement in health care? It does for the monopolistic (ologopolistic) health carriers.</div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify"></div><div align="justify">I know that the answer to all of these questions is to acknowledge that Financial Darwinism is the problem. Financial Darwinists want all the biggest and wealthiest companies and people to make as much money as possible and do not care if it is at the expense of the American democratic design ethic which is to provide a society that is - "by the people and for the people." Today, only 55 years after our country truely emerged from the "Great Depression," we are back in the 20's - only it is worse. Mass media has become a relentless propoganda machine fueled by the ultra rich. Greed is good. Education is on the decline. And to avoid the devastation of "new" economic theories from the 80s, which are essentially laissez-faire based theories - all the political lies must be recognized as Social Darwinism/Financial Darwinistic Propoganda. </div><div align="justify"></div><div align="justify"></div><div align="justify">The media is on a tight rope. Only a few individuals have the guts, the insight or are allowed to express the truth, which is self-evident. It's a good thing that Chris Mathews, Ed and Keith are still on TV, and Krugman is still in the Times, but where is everyone else? ?</div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify">Today, October 30th, all the talking heads talk about is the threat of cargo jet packages, but what about <strong>the danger of allowing the party that voted against Social Security and Medicare</strong>, <strong>and the people who within the last 10 years pushed for deregulation (the tearing down of barriers errected to protect us from Greed in the aftermath of the depression) gain</strong> <strong>more control over our mutual and simbiotic destiny</strong>? What about giving more power to people against health care and financial reform? What about electing individuals - who are for: Mega Health Carriers, Mega Bank Holding Companies; and against Gov spending to create jobs, against making banks lend to small businesses, against regulations to protect us from Greed as well as against Jefferson's idea that the "role of government is to protect the Public?"</div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify"></div><div align="justify">What about pointing out the evils of propoganda based on absolute lies and half truths to get the masses to act like pawns supporting what is best for the ultra rich. And what about Democrats who do not know how to stand up for the truth or the imperfect Health Care bill? What about our Supreme Court that is now firmly in the corner of Financial Darwinists! So today let's talk about how historic it will be if Dems lose 60 seats, and agree that nothing will get done if the T party and the Repubs gain control of the house. Two years of doing nothing in the name of political philosophy while so many of their fellow Americans suffer in the shadows of 17% real unemployment.</div><div align="justify"></div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com1tag:blogger.com,1999:blog-1283941990659309700.post-19997221494481994122010-07-25T08:52:00.019-04:002010-07-27T08:13:02.112-04:00All the Truth And Nothing But The Truth<div align="justify">Former Goldman CEO Henry Paulson, it has been reported, once again has declared that the "root cause of all this are housing policies," referring to the 2008 meltdown, and that the reform legislation has not focused specifically on housing policy. Although reform has not specifically focused on housing it is a misleading conclusion only designed to avoid blame, and not illuminate the real root cause - which is Financial Darwinism.<br /></div><br /><div align="justify"></div><br /><div align="justify">So Paulson, a former Prince of investment banking, once again indulged in blame shifting. To focus on "housing policies" as the primary cluprit is to avoid a clear view that Wall Street's voracious demand for enough mortgages to package into "too complex to explain" investments fueled the demand for more and more mortgages. Do not overlook how badly Wall Street needed tons of mortgages to turn into "complex financial instruments" to securitize and then sell to satiate its greed-based, rapacious appetite to create fees. Fees were the rule and the ethic - not value for investors.</div><br /><div align="justify"></div><br /><div align="justify">Last year Mega Bank Holding Companies, which had been investment banks, generated record profits. Hiring has resumed at record salaries, becuase Wall Street has not missed a step as it continues to contrive egregiously leveraged complex investments, sometimes referred to as financial instruments. Certainly banks are not using much of their capital to fund capital formation, ie., loans to small businesses to create jobs by underwriting businesses that desparately need money to exist and possibly expand. </div><br /><br /><div align="justify">These complex financial instruments, like those of the past that did us in, still offer the illusion of guarantees - and are still referred to as "colaterialized." Collaterialized by what - the mirage of a Credit Default Swap.</div><br /><div align="justify"></div><br /><div align="justify">Now our regulators have another 2,000 pages of reform. In the year 2000 the Fed had over 1,550 pages of Bank Holding Company Regulations . If the Fed had only enforced one reg that prohibited selling a security that could not be explained well enough to be understood - then none of the "too complex to explain" complex financial instruments could have been sold. The SEC could have stopped the collaterialized debt obligations by using regulations in effect in 2000 which addressed disclosure and the ommission of significant information. Finally the SEC has recoginzed this (a little late) and slapped Goldman on the wrist with a 500MM fine; small change compared with their egregious profits in the past and their continuing use of crazed leverage. I have contended in my book that the "too complex to explain" were material violations of existing regs; the SEC has not gone far enough yet.</div><div align="justify"> </div><div align="justify"> </div><div align="justify"></div><div align="justify"></div><div align="justify"></div><div align="justify"></div><div align="justify"></div><div align="justify">But good news - now we have a "systemic risk regulator" to spot the toxicity of too much leverage. This is absurd considering the self-evident toxic nature of too much leverage-debt. When so much money was being generated by leverage no one wanted to turn off the faucette, although so many smart economists working for the Fed had to have some awareness of the evils of debt and the lack of sense behind the too complex to explain. Regretably our leading regulators agrued for deregulation which unleased a renewal of Laissez-faire economics from the days of Social Darwinism.</div><br /><div align="justify"></div><br /><div align="justify">Our financial media has not properly investigated or analyzed the substance behind what is reported as, or deemed to be, an empirical pronouncement. Or are they are on the side of the Laissez-faire economics which led to the "Great Depression?" It is possible they are too young to make the distinction between the Chicago School of Econ from the late 70s and the rational concerns of economists like Samuelson and Thurow from the aftermath of the depression.</div><div align="justify"></div><div align="justify"></div><div align="justify">And too many respected members of the Fourth Estate appear to be comfortable passing on arogant excusses and phony reasons, without probing questions, from all the heavily credentialed, expert pundits who should have known enough, but failed to recognize that <strong>too much leverage, if</strong> <strong>everything does not go exactly right, turns into poison</strong>. Of course the risk of way too much leverage was/is "insured" and this fictitious insurance is what killed AIG and the others who assumed that everything would always go up. Where has investigative objectivity gone? Is it OK to pass on hopelessly slanted opinions which in turn create uninformed public opinion?<br /></div><div align="justify"></div><br /><div align="justify">We are still using and buying into concepts like "collateralized debt obligations." And our new so-called financial reform has not truely addressed the lack of real substance behind what is purported to be collateral. For example the Credit Default Swap lives on, and there is no legal definition governing how this "insurance" is backed up by any form of rational reserves to underwrite the toxicity of too much leverage still being "collateralized" and insured. The government is still on the hook, which means we are still providing the collateral for Goldman to churn financial products for fees, some of which have finally been related to fraud!</div><br /><div align="justify"></div><br /><div align="justify"><strong><em>All the truth and nothing but the truth - </em>is still missing in action</strong>. The truth of what our former investment banks, now Bank Holding Companies, are not required to do is obvious to all the small businesses who need capital. These so-called banks are still using 100s of Billions free capital provided by the FDIC to support the leverage behind their proprietory financial products issued and sold to provide revenue for their own greed, how do you think Goldman generated record profits last year? The truth of morally backrupt economic policies from Friedman and Greenspan is still shoved under the rug. And an Everest sized iceberg of unemployment still lurks under the surface of Wall Streets recovery. Because Banks are not required to make loans to small businesses based on some relationship to the Billions and Billions of essentially free capital provided to them by the Fed and the FDIC - our recovery is more for Wall Street than mainstreet.</div><br /><div align="justify"></div><br /><div align="justify">Don't forget Banks make so much more money using leverage for their own accounts than they can generate by lending to small businesses. So there is far less motivation to lend for capital formation. And Financial Reform which continues to allow Banks to use leverage - (based on funds from the Fed and the FDIC, our money) - for financial investments in lieu of lending for real investment is wrong. The continuing problem is that investment banks, like Goldman, have been allowed to remain bank holding companies, so they qualify as banks to receive vast sums of money from the Fed and the FDIC - therefore shift their still highly leveraged risk to the government.<br /></div><div align="justify"></div><br /><div align="justify">Reform is to abolish abuse. Womens Sufferage, Glass-Steagall and The Civil Rights Act are examples of government legislative reform. Reform which focuses on how to spot too much financial risk faster, when the Fed blew it in the year 2000 by not spotting the ludicrious fallaceous nature of Credit Default Swaps to cover up the risk of egregious leverage is misleading. Reform which does nothing meaningful to curb CDSs is ludicrous. And reform which does not require all the new Bank Holding Companies, which were formerly investment banks, to lend to small business to stimulate capital formation to create jobs is a stain against humanity and truth.</div><br /><div align="justify"></div><br /><div align="justify"></div><br /><div align="justify"></div><br /><div align="justify"></div><br /><div align="justify"></div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-24383397471103581692010-01-05T08:17:00.011-05:002010-09-02T09:19:32.175-04:00Bernanke Still In Denial<div align="justify">"Lax oversight Caused Crisis, Bernanke Says," NY Times front page headline Monday, January 4th. The article went on to observe that Bernanke's remarks in his Sunday speach in Atlanta were, "perhaps his strongest language yet assessing the roots of the financial crises."<br /><br />So once again the leader of the Fed is more concerned with enlarging the power of his (the Fed's) fiefdom than recognizing the realties of what actually happened. Bernanke's defense of interest rate policy (Monetary Policy) begs the question of economic policy in lieu of admitting or exposing the fact that the Fed failed to regulate Bank Holding Companies. (And the SEC forgot about 10B5 violations as well.) When is anyone or any newspaper going to point out that the Fed (and the SEC) failed to enforce their own regs - regulations which would have prevented the sales of "complex securities" that were supposed to be explained well enough to be understood. So it was a severe violation of regulations to have sold all the CMOs and CDOs that "guaranteed" the lenders debt obligations which enabled them to have sold the volume of mortgages necessary to have created a housing bloat - "bubble." ( Severe violations of significant regulations have the force of law behind them! ) And the sales of the too complex to explain continue unfettered!<br /><br />Congress, in its ultimate wisdom, continues to miss this fact, and laps up whatever the head of the current head of the Fed contends, just like it did when Greenspan confused and impressed Congress with his so-called brilliance and degrees. Congress has continually failed to look past all the huge credentials of their appointees to the lack of insight and wisdom behind verbal behavior primarily offered to get Congress off their backs so they can continue to promote a lack of common sense and hide underneath a shroud of economic Financial Darwinism. Remember Greenspan admitted that he did not understand the "too complex to explain financial instruments;" and if Bernanke did why didn't he stop it. Why didn't Bernanke, when he was on the Fed Board of Governors, once question the lack of any substance behind the empty promise of Credit Default Swaps. And why does brilliant Bernanke not cry out about the fact that to continue to the existence of Credit Default Swaps is to allow one of the major culprits in our financial sea of quicksand to continue live on to kill us again. Credit Default Swaps may be analogous to a serial rapist - a serial financial rapist.<br /><br />When Swindled is in print you will know just how self-serving and self-absorbed Bernanke and his financial leadership cohorts are, and have been. This is not to say that he is the major culprit, but he was watching silently while the Fed allowed severe violations of its regs to flourish. You will clearly understand that Obama's appointee's recommendations to Congress to reregulate are based on expanding their own power rather than on curing the disease. You will become aware of the fact that since 1980 economic theory has been fueled by the greed of Financial Darwinists, as economists have diverted reality by focusing on Monetary Policy and Money Supply at the expense of the fabric of our society. Geihtner, Summers, Bair, whoever was in charge of SEC, Schapiro, Bernanke and a number of other very important heavily credentialed genius' apparently were blinded by the glare of all money that was made and overlooked how it was made.</div><div align="justify"><br /><strong>David Satterfield</strong>, <strong>with 2 Pulitzers</strong>, <strong>former business editor of the</strong> <strong>Mami Herald</strong> and managing editor of the San Jose Mercury News, <strong>said</strong> this about my book: "<strong>With</strong> <strong>keen intellect and searing wit, Henry Schoenberger's How We Got Swindled exposes the myriad financial hijinks and</strong> <strong>colossal leadership failures that have turned the first decade of the new century into an economic disaster. Schoenberger not only identifies the causes, rationales and human failings the led to this mess; he provides some ready answers for how we must go about fixing it. This should be must-reading for every policy maker in Washington and every student of economics and finance."</strong></div><div align="justify"><strong></strong></div><div align="justify"></div><div align="justify"></div><div align="justify">With this unequivocal endorsement, from a 2 time Pulitzer prize winning business editor recongnized for relentlessly pursuing truth - there ought to be a publisher with enough guts, insight and concern for brutally candid truth who would be proud to publish How We Got Swindled. However this probably will be difficult as the publisher must have the courage and conviction to stand up for truth knowing the entrenced power structure on Wall Street will not embrace the truth, or be happy about the book. An additional hurdle to finding this kind of publisher is that our Congress is far more concerned with getting money to remain in office than in protecting the public good from avoracious greed, so getting along today with the power structure seems to be the rule. I know from my editor at Doubleday 20 years ago that publishers prefer to "communicate rather than litigate." <strong>As a whistleblowing insider author of an extremely diligent, and fascinating book which has been reviewed as, "absolutely on spot" I</strong> <strong>know Swindled will make many publishers nervous; and it will make my fellow Americans understand fully why they have been swindled!</strong> Several publishers have contended they are reading the complete manuscript. So I hope Swindled will appear in the public domain soon, because there is a dire need for my fellow Americans to be aware of the fact that much of the propsed regulation changes are no better than band aids on an open wound.<br /><br />Although this final thought is out of context (I have not had the time lately to add to my blog) - it is important to point out that James Norris, business editor of the NYTimes listed Fox's book, The Myth of the Rational Market Theory, as one of the six most important books of 2009. In this book Fox concluded that until Yale's Robert Shiller, a behavioral economist, pointed to clear evidence that many of us do not act rationally - the Efficient Market Hypothesis was accepted as gospel. How ludricious that gospel had nothing to do with generations of psychologists noting man's inablility to think straight; or that Ellis and Harper's <em>New Guide to</em> <em>Rational Emotive Therapy</em> was published 50 years before Fox stumbled upon Shiller and Shiller stumbled upon the history of man's irrationality and man's inhumanity toward his fellow man. Coo-coo! Over 300 pages devoted to how man is not rational economically! Man, of course, has a long and lofty rational history regarding religion and wars and seeking revenge for 9/11 in the wrong country. Divorce and its aftermath of joint custody is steeped in rationality, and burkas and slavery make irrationally seem tame. Our legal system is also a paragon of rationalty, always seeking truth. So thank god for Yale's Robert Shiller who discovered that man may just not be rational about money.<br /><br />Happy New Year - i hope.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-3005881994042812982009-11-05T08:21:00.011-05:002009-11-14T15:19:23.387-05:00Goldman Infiltrates Gov - And Got $54 Billion of Risk Capital!<div align="justify">The <strong>Government has shoveled $54 Billion to Goldman</strong>, according to Dylan Ratigan, in the form of TARP $ wheeled from AIG, loans from the Fed and $30 Billion from FDIC, all at little or no interest. In September of 08 the Fed allowed Goldman and other Investment Banks to become Bank Holding Companies so that they could receive huge loans from the FDIC and other funding only available to Bank Holding Companies ("BHCs".) <strong>And these BHCs who were formerly investment banks are not required to engage in "usual and customary" banking activities like consumer or commercial loans. WHY NOT???</strong></div><div align="justify"><strong></strong></div><div align="justify"><strong>Goldman has used our money as risk capital to continue to generate huge profits from gargantuan risk - similar to the 30 to 40-1 leverage which led to our current financial holocaust. </strong>Once again Goldman is using our money not for real investment to provide capital formation which will create jobs, but for contrived innovated financial investment to create swine-bonuses for itself! And "our" pay "Czar" and our-Congress have silently watched or claimed there is nothing they can do - because "Goldman paid back their original TARP dollars" - what a load of crap!</div><div align="justify"></div><div align="justify"></div><div align="justify">Everyone in Congress, and Obama, talks about the importance of job creation and the importance of "small business" in the process. No one really has addressed the abject failure of the SBA (Small Business Administration) to come to grips with the red tape and untenable barriers to obtaining funding for expansion or for a new, reasonable start up business! The requirements to obtain funding are infinitely more restrictive than the give-aways to Goldman and AIG and CITI and MORGAN and BANK OF AMERICA; and a host of others who sabatoged our economy and devestated the lives of so many millions of their fellow Americans.</div><div align="justify"></div><div align="justify">It is time for Congress and our President to allocate $54 Billion to fund a special SBA unit to short cut all the bureaurocratic hurdles and provide funds for small business using the business as collateral, not the personal signiture of the entrepreneur who can not obtain a bank loan because of a variety of reasons - (many stemming from the financial holocost (caust) or from health insurance problems.) If taxpayers can give money to the failed financial institutions who caused the great recession with little hope of repayment - <strong>THEN WHY NOT PROVIDE FUNDING FOR RATIONAL BUSINESSES WHICH WILL IMMEDIATELY CREATE NEW JOBS!</strong></div><div align="justify"><strong></strong></div><div align="justify">Today the SBA is more concerned with personal signitures than with job creation. All the platitudes from Congress about their expressed concern for small business (which is resposible for more job creation than big business) is not backed up by empirical evidence that politicians give a shit about anything but being elected and getting along with campaign contributors from Wall Street and the Monopolistic Health Ins. Carriers! This applies to both sides of the aisle. The New Deal worked because Roosevelt appionted strong individuals to responsible positions and let them make independant decisions without committee bureaucratic mind numbing mechanically operative cover your ass inertia. Why not appoint Jack Welch to circumvent all the BS and establish a method to bypass the barrier of the personal signiture to fund deserving businesses with appropriate business plans based on logical executive summaries and appropriate financial projections from suitable accountants? </div><div align="justify"></div><div align="justify">Right now we are going nowhere fast as unemployment accelerates - while Goldman uses our money for itself! What do we really have to lose - besides time and a more functional capital formation process. If Congress remains crippled by an over-concern for how the SBA gets repaid - then to not realistically, objectively and pragmatically focus on the benefits of non-recourse SBA funding (notwithstanding the fact that all loans will not work) will cause the jobless to continue to tragically suffer as well as our entire country. The entire country suffers as local tax bases continue to go down the toilet along with all other streams of tax revenues from income; and this exacerbates all kinds of societal problems. So the equation between more of the same and doing something new clearly results in concretely favoring small business for a change - lip service just makes the liar feel better. Focus on the awful fact that <strong>TRILLIONS HAVE ALREADY BEEN COMMITED TO THE CULPRITS WHO I WROTE ABOUT IN MY NEW BOOK - <em>HOW WE GOT SWINDLED BY WALL STREET GODFATHERS, GREED AND FINANCIAL DARWINISM!</em></strong></div><div align="justify"></div><div align="justify"><strong></strong></div><div align="justify">If Congress really cares about a rational way to immediately provide jobs and capital formation it only makes sense to take the $54 billion back from Goldman, or at least make Goldman fund the new SBA section to provide immediate, non-recourse funding for deserving small businesses.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-86556462278157644312009-10-22T09:50:00.015-04:002009-11-03T23:38:14.683-05:00Wall Street Greed Soars Again - Regulations???<div align="justify">A WWJ headline last week reported that The Wall St. Crises Has Ebbed. Today, 10/22, the NY Times Business Page headline proclaimed - Who Gets Paid What - <strong>because of a renewal of</strong> <strong>soaring</strong> <strong>compensation as a function of</strong> <strong>bailouts and free risk capital from taxpayers</strong>. <strong>Now the compensation crises is over for Wall Street -</strong> <strong>thank god -</strong> while real unemploymen (human financially cancelled lives) climbs to over 15%.</div><div align="justify"></div><div align="justify"></div><div align="justify"></div><div align="justify"></div><div align="justify">Regulators continue to be the same individuals who failed to curb the sales of financially contrived 40-1 leveraged derivatives that were described as, "Too Complex To Explain." Based on existing SEC and Fed regulations it is a severe violation of the regulations to have sold any complex financial products which could not be fully explained well enough to be properly understood. Important regulations to protect the public and markets have the force of law behind them; therefore, in my opinion after 40 years in the securities business, the law has been broken. Congress has not called for the Attorney General to appoint a special prosecutor; and the SEC has not investigated a terrible breach of their own regualtions; and the Chairman of the Fed as well the the Secretary of the Treasury have refrained from any call for investigation as well! (This is what Swindled is about.)<br /><br />Elizabeth Warren said today on Morning Joe that regulators were too cozy and too impressed with the success of the people (based on their huge incomes) who ran the Banks and Investment Banks. <strong>Elizabeth Warren has demonstrated the guts and insight, as well as a concern for ethics and humanity</strong> (that so few seem to have) <strong>and should immediately be appointed Secretary of Treasury</strong>. She has no conflicts and no ties to Goldman Sachs!Paul Volcker whose track record of prescient good and independant judgement has earned him the right and need to be listened to about Wall Street, and especially the Banks - because they are now one and the same. </div><div align="justify"></div><div align="justify">Schapiro, Summers, Geithner and Bernanke, (may all be brilliant and nice people) were all there <strong>cheerleading deregulation</strong> <strong>(based the closet greed</strong> <strong>of the</strong> <strong>bogus economic theories of Financial Darwinism) or sitting on the sidlines while the barriers against greed</strong> <strong>were gutted and torn down</strong> - <strong>AND REGULATIONS WERE CLEARLY BROKEN on their watch!</strong></div><div align="justify"><strong></strong></div><div align="justify"><strong></strong></div><div align="justify"><strong></strong></div><div align="justify"></div><div align="justify">All have been elevated to new positions of power and influence although it is clear they exercised egregiously poor judgement in the past. <strong>In the face of no meaningful new regualations - only Paul Volcker is speaking out in recognition of the need to rebuild Glass Steagall and The 1956 Bank</strong> <strong>Holding Company Act</strong>. The SEC, now led by Schapiro of NASD/FINRA fame; the Treasury, now led by Geithner, former Vice Chairman of the Fed; Summers, Obama's chief economic advisor a fervid devote of the Chicago School Economic Theories based on human rationality; and Bernanke still in the same job as Chairman of the Fed - did nothing from the inception of our financial holocost (caust) and joined the claim offered by Wall Street that they did not recognize all the risk. Remember - this is just like it was claimed that no one even guessed Madoff was a swindler although his contended returns were were worse than implausible, even to the naked eye! Now, retrospectively, the brilliant Greenspan has admitted that he did not understand the "too complex to explain" althought he said it is fair to think he knows alot about math. Greenspan also believed in the bizzare notion that the Market is Rational - <strong>where is the historical empirical evidence of man's rationality?</strong></div><div align="justify"><strong></strong></div><div align="justify"><strong></strong></div><div align="justify"></div><div align="justify"></div><div align="justify"><strong>The Rational Market hypothesis is proof of Man's irrationality or is it proof that Man will fabricate any reason to justify allowing self-interested greed to take advantgage of the many for the few swindlers willing to exploit their victims. </strong>This exploitation took place globally.<br /><br />Today <strong>it is obvious that size is toxic - Volcker knows.</strong> This fact becqme self-evident in the aftermath of the "Great Depression." And once again, lies that size is necessary to compete globally are being advanced by Wall Street to maintain and support their unbridiled and unfettered (unrestricted) self-interested Greed. Think about Billions and Billions of bonuses and cash getting set to be paid out for highly speculative risk supported by taxpayer capital! Support Paul Volcker, write letters to Congress, get new people with historical judgement and ethics, people without ties to Wall Street and Goldman, to frame new legislation to stop all the Greed which is still alive and well. And help me find a way to get the best book about how this really happened and what to do about it into the public domain.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-18828920718985759522009-09-27T12:17:00.018-04:002009-09-29T13:23:57.780-04:00Did Bankers' Pay Inflame Financial Crises? duh!<div align="justify">Today Mark Hulbert - STRATEGIES - NYTIMES - writes about how 2 Swiss finance professors have concluded that CEO pay has not been a major factor in our great recession. Their study, the Stutz-Fahlenbrach study, provides the specious contention that there is no empirical evidence that compensation incentatives which encouraged excessive risk taking (40-1 leveraged backed by outright lies of collaterialization) played a large role in the credit crises. Hulbert reports that, Stultz says there is little evidence that comp reform would have helped head off the crises. Further he quotes <strong>Stultz, "neither bank CEOs nor regulators thought banks</strong> <strong>were taking excessive risks."</strong> <strong>Maybe CEOs and regulators (like Greenspan) also thought the planet was flat and that creationism made sense - if they honestly thought 40-1</strong> <strong>leverage was a small risk!</strong> Hulbert went on to say Stultz pointed out that in 2006 a collaterialized-debt obligation with a triple-A rating didn't look like a huge risk; and quoted Stultz who said, "On the contrary, it looked like an extremely low risk asset, yet banks incurred extremely large losses on such CDOs." Not to denigrate all Swiss, but the Swiss history of bankers who have protected tax cheaters, and dictators who took money from their destitute populations to secrete it away for themselves, Bankers who fought to have kept Nazi gold for decades after Germany became a responsible and concerned member of democratic nations - makes it hard for me to accept Swiss financial objectivity. </div><div align="justify"></div><div align="justify">The apparently slanted "study" from the Swiss finance professors, considering their irrelevant reasoning leading to fallacious conclusions, is a ludicrous logical absurdity. As finance professors should they not have mentioned, or known that bankers and regulators had a fiduciary obligation as well as an ability to have analyzed the substance beneath the surface of what "looked like low risk" to conclude that the high risk was fraudulently backed (contrived) to appear to be low risk so that it would appeal to investors searching for safety. No bank would have accepted the collateral Bankers fabricated to sell the geometrically leveraged financial innovated products <strong>contrived to appeal to risk averse investors so it could be easily sold</strong>!</div><div align="justify">Bank CEOs and finance professors - along with regulators need to become more familiar with the existing regulations which prohibit selling securities which cannot be fully explained! This knowledge would also be helpful to economists, rating agencies and the financial media. Congress could also use a remedial course in SEC and Fed regs. (This is what Swindled vehemently exposes and fully explains.)</div><div align="justify"></div><div align="justify"></div><div align="justify">A paper by two Harvard law professors, Lucian Bebchulk and Holger Spammann reached an entirely different posture toward compensation and risk taking, a posture which makes sense based on the realities of what has really taken place. Their position is that bank executives generally have an incentive for "excessive risk-taking." And this is self-evident, but a huge understatement. Incentive is far less than accurate, it is similar to observing that cancer generally contributed to the cause of death; when there was a pandemic of virulent malignant metasticised melanomas which brought a nation to its knees. The truth of reality makes it obvious that the only objective of bank CEOs was to maximize profits no matter what the cost to anyone else. Clearly there was no concern for the stability of financial markets, and no concern for investors or the fabric of our society!</div><div align="justify"></div><div align="justify"></div><div align="justify">There has been so much irrational, circumspect reasoning circulated to obscure the fact that <strong>Financial Darwinism has been at</strong> <strong>the core of how we all got swindled. </strong> So self-serving studies should provide no more reasurance at this time than the empty promises of collaterialized securities did in the past. The argument - I did not, they did not know there was so much risk in so much leverage, and that no one knew the promise of the holy land of collateral was a grotesque misrepresentation is nuts- and in the final analysis must be regarded as flaming BULL SHIT. It's time for plain, honest talk not more of the same delusional reasoning to excuse the rape and pillage of our economy. The financial crises is really a human tradegy. (try - <a href="mailto:strategy@nytimes.com">strategy@nytimes.com</a>)</div><div align="justify"></div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-52872829524803824862009-09-02T16:42:00.010-04:002009-09-03T11:57:46.921-04:00NYTimes Sept 1st Sheila Bair OP-ED, reality check<div align="justify">"The Case Against a Super-Regulator" OP-ED by Sheila Bair, chairman of FDIC is a strange view of reality because Bair has argued that, "the creation of a single regulator...would endanger a thriving 150-year old banking system..." With the number of failing banks climbing and the trillions spent on bailout her thriving contention is ludicrous. She did say she was for reform, and pointed out that, "The principal enablers of our current difficulties were institutions that took on enormous risk by exploiting regulatory gaps between banks and the non-bank shadow financial system, and by using unregulated over-the -counter derivative contracts to develop volatile and potentially dangerous products." Which is another way to say that it was not really the fault of regualtors. And worse overlooks the fact that although Glass-Steagall and the 1956 Bank Holding Company Act were overturned at the end of 1999 - which was a tear down of the firewalls between greed and most of my fellow Americans (who may be regarded as victims) - there were still regulations which if the Fed and the SEC had enforced would still have prevented the sale of so many securities that were "too complex to explain." Furthermore these securities did not have any collateral that would have satisfied any of the banks flipping all the so-called Complex Collateralized Debt - actually there was no real collateral, which constitutes fraud in the opinion of 2 prominent Cleveland securities attorneys!</div><div align="justify"></div><div align="justify"></div><div align="justify">So gaps were not the problem - except gaps in the attention spans of the regulators. And my book makes all of this crystal clear; which could lead to the conclusion, based on existing regulations which have the force of law behind them, that it was a tragic violation of law to have sold these "complex innovative" financial instruments. Bair did conclude that, "We may never have a better opportunity to address root causes of this crises - and prevent it from happening again." And she is right about now is the time to address root causes, however it is essential to go far deeper into all the significant underlying factors to understand the real truth of what happened. It is necessary to understand the key role of Financial Darwinism. It is critical to reject her excuse about gaps, which sounds like denial and aviodance to me. In my opinion - based on 40 years of personal experience and 7 months of research to verify the accuracy of the observations and conclusions I share with readers in my new book - her OP-ED is self-serving and designed to protect her turf, notwithstanding her protestation to the contrary.</div><div align="justify"></div><div align="justify">A Super-Regulator, or any regulator without wisdom, common sense and a great detective's concern for right and wrong is as worthless as all the regulators who failed to stop all the violations of the regs years before there was a crisis. Regulators have praised themselves for how they have performed in this crisis, but isn't it so much more important to examine what was done to prevent the crisis? No regulators cried out against tearing down the barriers against greed which worked for 50 years in the aftermath of the Great Depression. And it ought to be apparent that our regulators failed miserably to enforce existing regs. Greenspan, leader of the FED was a cheerleader for "deregulation" and did nothing to enforce existing regs; there are 1500 pages of FED bank holding company regs!The best way to understand how to plug regulatory gaps and stop this from happening again would be to read How We Got Swindled as well as to stop asking culprits for their opinions and stop listening to all the excuses and false conclusions.</div><div align="justify"></div><div align="justify">Finally - ask yourself if you saw a stealth bomber sneaking across the sky at an altitude of 500 feet would you see it - just like the absolute lack of collateral was easily visable to bankers who expect infinitely better collateral from us than what they claimed was in place behind the complex financial debt instruments they were the issuers of and sold to the public - us. Banks and their regulators had to know that CDOs and CMOs were "collaterialized" by worse than junk bond debt, or absolutely worthless credit default swaps. Every banker I have known would have laughed at me if I had tried to use a trench of crappy debt or worthless swaps as collateral to obtain a loan. If my financial statement, when applying for a loan, had the speculative and imprudent leverage of so many banks, (which Bair was responsible to control) I would have been kicked out, all of us would have been. And now Bair is concerned about banks having more capital - duh. For the real truth help me get out Swindled. 216-831-6388</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0tag:blogger.com,1999:blog-1283941990659309700.post-87134600369526458992009-08-14T13:54:00.004-04:002009-09-16T13:31:30.594-04:00New book<div align="justify">I have just completed writing my new book, after almost seven months of research to sharpen my focus - in addition to <strong>40 years of successful experience in the securities business</strong>. I did not want to write an opinion book without including the substance of impirical evidence which leads to objective conclusions. My goal was not to write an easy read or leave out the history underlying the tear down of firewalls ("deregulation") - which were barriers established in the aftermath of the Great Depression to protect the public from unbridled greed. My book starts with Herbert Spencer's "survival of the fittest" Social Darwinism of the 1880's - and makes the case for why <strong>Financial Darwinism is the root cause of our financial tragedy</strong>. It is not a simple snapshot of one or two causal factors. Swindled provides readers with an insider's evaluation and view of the context and substance of all the culprits and fundamental issues necessary to consider to acheive a functional understanding of the greatest swindle of American taxpayors since the 30"s. </div><div align="justify"></div><div align="justify"></div><div align="justify">My first book, which The Miami Herald said was a "Zen Guide To Aviod Getting Hosed," is now available again at B&N on line - because B&N believed what I said to protect investors in 1990 is equally valid today. Visit my website, <a href="http://www.1031ticpropertyadvisors.net/">http://www.1031ticpropertyadvisors.net/</a>, to find out what <em>Invest for Success, How to Avoid Getting Ripped Off by Real Estate Partnerships, the</em> <em>Stock Market and Diversification</em> was about. Today we are alive in a time that has devalued ethics and deregulated greed. In the future I will share additional (insider) insights from my new book, insights which have been hidden from the public; for example, <strong>how can anyone sell a security which is described as "too complex to explain" when, based on SEC and FED regulations, it is illegal to sell a security which cannot be fully explained? </strong>Swindled cites pertinent regs. When you see this you will be outraged! Think about how the Market is Rational postulate underlies the failed economic theories from the Chicago School of free and effective self-correction - <strong>the Market is</strong> comprised of human beings, and in fact, is an <strong>Emotional Bandwagon</strong>.</div><div align="justify"><strong></strong></div><div align="justify"><strong></strong></div><div align="justify">I have had trouble obtaining a publisher for a vehement accurate book, by an outraged author, which objectively blows the whistle on all the culprits. So I am open to help. In the future I will share with you more of why Swindled provides the most objective and profound overview of what has gone so wrong and how to proceed forward on a more certain and symbiotic path to participate in a more stable and fair financial world. I will also discuss what is strangely missing from health insurance considerations, and other political failings.</div><div align="justify"></div><div align="justify"></div><div align="justify">My blog will be about unvarnished, even politically incorrect, objective truth, because I believe many of my fellow Americans are hungry for the truth - but probably not the "birthers," or those who prefer standing up for the best interests of monpolistic health carriers instead of their fellow Americans.</div>Henry Schoenbergerhttp://www.blogger.com/profile/03232396563826360259noreply@blogger.com0