Arrange the Flowers, then gun down the Co-op

A couple of months ago, I wrote the story

Coop got done NY mafia style.

The fact that JPMorgan and Goldman were brought in

was just the cherry on top, for this fraud.

You see, my point was, the Coop was set up by the elites, 

usually those found in the government, as a way to get rid

of the only co-operative mutual bank on the High Street. 

This was my educated guess. I was right.

The article below will explain how it was done, by the 

admission (or evident stupidity of) their point man, 

Reverend Flowers. that's right, a priest.

- a drug-taking, with pedo claims and public indecency

claims, fudging expenses claims, and no banking experience.

I "saw" how Flowers was put in place by the elite and 

rubberstamped by the Coop board. How do I know? It's so 

odd. In old, low-key enterprises like the Coop, the elite is 

respected and allowed to do what it wants. Nobody wants 

to rock the boat. I don't want to get into UK meetings 

psychology, but that's also part of it.

So, the elite brought in this loser. The loser admits that the 

elite (see below) pushed Coop to buy Britania Bank, with the 

help of JPM and GS, even though it was obvious that the 

bad debts of BB would ruin the Coop, as happened recently.

The elite also told Coop to buy 650 Lloyd's Bank branches

again with the mounting problems. 

Flowers then blew up at the right time to make the Coop into

a right mess. Yes, the Coop were fools, but the elite destroyed

them, for the benefit of the big banks. Lots of people now 

want to leave the Coop but where can they go. All the other

banks are derivatives cheats, thieves, on the government pay,

corrupt stock market gamblers.

A perfect situation for those banks now. The Coop was on 

the verge of becoming the only option. If you think that big

banks have bigger fish to fry, then you don't realise that those

banks want to corner the market, then they'll charge 

depositors to even look at their balances.

Mark my words.

Checkit: theguardian.com

Co-operative Bank's former chairman 'seeking help' after drugs admission

Methodist minister Paul Flowers seen in video counting out money to buy substances, while texts discuss drug taking

Haroon Siddique     

   Sunday 17 November 2013 09.50 GMT  

The Co-operative Bank's former chairman Paul Flowers has apologised for his "stupid and wrong" behaviour and said he is seeking professional help after a video was published showing the Methodist minister handing over money to buy hard drugs.

The footage showed Flowers counting out £300 in cash and asking if he could also get hold of ketamine. The Mail on Sunday said a friend of Flowers handed over the footage, purportedly recorded days after the former Co-operative Bank chairman gave testimony to the Treasury select committee over the bank's £700m in losses and its abandoned bid to buy branches of the bailed-out Lloyds Bank.

Stuart Davies handed over the video and a series of incriminating text messages after becoming "disgusted by the hypocrisy" of a man who had chaired the anti-drugs charity Lifeline and written columns about the evils of drug use, the Mail on Sunday said.

After being confronted with the material, Flowers, 63, referred to the pressures of his job and dealing with a family bereavement.

"This year has been incredibly difficult, with a death in the family and the pressures of my role with the Co-operative Bank," he said. "At the lowest point in this terrible period I did things that were stupid and wrong. I am sorry for this and I am seeking professional help and apologise to all I have hurt or failed by my actions."

Davies also handed over text messages purporting to be from Flowers. One said: "I was 'grilled' by the Treasury select committee yesterday and afterwards came to Manchester to get wasted with friends." In others he said he was on "ket" and had the club drug GHB. Davies said he smoked cannabis with Flowers and witnessed him smoking crack cocaine.

The Co-operative Bank said it had no comment, while the Methodist church said a thorough investigation would take place.

"We expect high standards of our ministers and we have procedures in place for when ministers fail to meet those standards.

"Paul is suspended from duties for a period of three weeks, pending investigations, and will not be available to carry out any ministerial work. We will also work with the police if they feel a crime has been committed."

On 7 November, Flowers tried to spread the blame for the bank's woes, telling the select committee that politicians had actively encouraged the Co-op Bank's expansion spree involving an ill-fated attempt to buy 631 branches from the Lloyds Banking Group.

The bank also disastrously took over the Britannia building society, a deal that brought with it a raft of bad loans.

Flowers said he had resigned as chairman in June 2013 to take responsibility for a £1.5bn capital shortfall that left the Co-op group having to demutualise the 100-year-old bank and hand a 70% share in the British institution to a group of bondholders involving US hedge funds.

ECB & Merkel vs Frankfurt

Hey, folks, Mish has got wind of the ECB and its
plans to print bonds to cover all the gambling.
Frankfurt (German Central Bank) is complaining,
but Mario the Draghon is belittling them.
In mafia language, that means that Mario is
swinging the big stick.

Wait until after Merkel's re-election and you can
wallpaper your office with them bond-aids.

chuckle away: Mish

....Here is a better translation from "EM".

"Thus, the willing investor saw with great astonishment at the last ECB press conference Jens Weidmann was held up to ridicule by Mario Draghi and the Portuguese Vitor Constancio, the vice president of the ECB. An absolute rarity in the history of the ECB."

The point of the article was the increasing isolation of Weidmann, up to the point of open ridicule by the president and vice-president of the ECB.

With the help of Bran from Spain, Andrea from Italy, and "EM" from Germany I can frequently provide much better translations of foreign articles than I could otherwise. Of course, articles from Tony and others from Australia and Canada are appreciated but require no translation.

Official Denial

The key point of the Welt Online story is the increasing isolation of Weidmann, including an official denial by the Bundesbank.

Consider this quote from yesterday as reported by Bloomberg. ...

“Nobody should try to create the impression that the Bundesbank or its president are isolated,” German ECB Executive Board member Joerg Asmussen told the Frankfurter Rundschau in today’s edition.

Mish Translation: "The Bundesbank and its president Jens Weidmann are without a doubt isolated and essentially ignored. The printing press door is open and the presses ready for operation."

---end

Call in the Grave Diggas 

Karl Denninger has got the idea too. ALTHOUGH HE’S PROBABLY BEEN EATING TURBO CHOCOPOPS, HE’S RIGHT (his grammar is screwed too)

c'est la guerre economique

check it: DENNINGER

Spain Demands WAR Upon The Rest Of Europe

This is a demand for economic warfare:

MADRID (Reuters) - The European Central Bank must take forceful and unlimited steps to buy sovereign debt to help Spain reduce its refinancing costs and eliminate doubts over the euro zone's future, Spain's economy minister said in comments published on Saturday.

"There can be no limit set or at least (the ECB) can't say how much they will use or for how long," when it buys bonds in the secondary markets, Luis de Guindos told Spanish news agency EFE.

So let's dissect this and see what this statement means.

Were the ECB to do this then it would be a monetization of the government's profligacy in Spain.  But the cost would fall upon all European nations and their people.

This is theft of property at gunpoint by unelected, unapproved people (the ECB) at the direction of a government beyond the victims' borders (Spain.)  The Spanish could not complain as they have the right to vote out of office the Spanish ruling class involved.

But the rest of Europe does not have any such right.  This would be, literally, the theft of their property (the value of their accumulated money denominated in Euros) at the point of a gun.

The people of Europe, other than in Spain, are thus as of today entirely justified in both moral and legal terms to rise and depose the leadership in Spain by any means necessary, and since they cannot vote in Spanish elections this leaves them only two options: Depart the Euro or invade Spain and depose its government by force.

the handouts are gone. long live the handouts

UPDATE: UK. if you thought that 320 Billion of QE money
was the sum total of the handouts to its banks, which are
mostly public utilities now (i.e. owned by the public),

but no.

according to an analyst on 5 Live radio,

George Osbourne is handing 100 billion pounds a year

to the banks, without informing the public.

About 6 months ago, I wrote something like:

Wait a tick. George is firing public servants,

cutting expenses and yet, every month, the UK

hits new a government borrowing record.

So I thought: I'll bet the banks are getting some, under the table.

Ching-ching. 

MAIN STORY:

We all know that the Troika is "lending" money to Greece
to keep the German banks of its back. Right?
That's one way in which the Troika is in fact helping banks.
The ECB is also designed to help banks, not countries,
because that would be socialism. Shhh. Don't read this out loud.
Of course, socialismophobia is the full-time job of the media,
which is also owned by the same oligarchs who are cheating
us everywhere else.

Well, what we didn't know is that the ECB has been handing
money to Greek and Spanish banks without having to tell
anyone. Of course, lately, they are. (see graph below)
But, in order to scare Greece into voting the right way,
they've decided to cut off this handout to "some" Greek banks.

You realise that, with fractional reserve banking, even lazy
Greek banks cannot withstand a decent bank run. Well,
Greeks have been lining up for 2 years, in fair numbers
to pull out their Euros, lest they turn into Drachmas.
If it wasn't for that money, the Greek banks , and thus the
country would have gone bankrupt at least 1 year ago.
Well, the world is not ready for the mouse to leave the
game. So, again, the ECB is doing this for the benefit
of the "banking system" and not for Greece. The Greeks
say thanks, anyway.

Well, lucky Luke Papademos, now former PM
(of the Unelected Marionette Party)
had the so-called EMA money (from the ECB,
as well) to plug up that leak in the boat. Isn't
Keynesianism great when it seeks to have
a multitude of methods of bailing out the banks?

last chapter in the summer's riots

This last article in the triptich will be used
to show that my guess was right about the summer's riots.
It took the government 7 months to tell the populace that
the police are largely to blame for inflaming the people
of Tottenham.
Of course, PM Cameron was on tv the very next day
after the riots to pour scorn on the rioters and put
them in jail for something as insignificant as a £5 bottle
of plonk.

There was opportunistic activity, but the minority
communities in the inner cities are under police
surveillance, with ridiculous 'racist' stop & search
policies. So, they exploded into violence.
London riots are part of the culture of the last
thousand years.


IshitUnot: Guardian
Joblessness and 'toxic relations' with police are blamed for Tottenham riot
Citizens inquiry reports that London borough suffers from lack of employment and 'low self-esteem' after interviewing 700 locals
Paul Lewis
* guardian.co.uk, Sunday 5 February 2012 17.53 GMT
A "citizens inquiry" into the riots in Tottenham will conclude they were partly caused by high youth unemployment and toxic relations with local police, arguing the disorder reveals the need for a major regeneration project in the area.
The north London borough was the first place to suffer riots last summer, when a protest about the police shooting of local man Mark Duggan turned violent. The trouble which started in Tottenham exactly six months ago quickly spread across London and to other English cities.

The report produced by the Citizens Inquiry into the Tottenham Riots, a grassroots coalition of locals, reveals that many in the community believe their area was "left to burn".

The study, which involved interviews with 700 people, will be launched on Tuesday at an event hosted by Reading the Riots, the Guardian and London School of Economics study into the August disturbances.

More than 270 rioters were interviewed in the Reading the Riots study, which found the government had mistaken the role of gangs and social media in the riots. It also found that hostility toward police, particularly over the use of stop and search, was a big factor.

The home secretary, Theresa May, later announced a police review of the use of stop and search and the Metropolitan police commissioner, Bernard Hogan-Howe, indicated the tactic is to be reformed in the capital.

The Tottenham report was written by a panel of nine commissioners, including four members of the clergy and a headteacher. It paints a picture of a community suffering from a poor reputation and low self-esteem.

It identified poor relations with police and a lack of jobs in the area as important "causes" of the riots. Criminal "opportunism" was also considered significant.

"From the stories we heard, there has been a long-term deterioration of the relationship between people in our community and the police, in particular young people from ethnic minorities," it will say. "Stop and search was frequently described as being excessive and disrespectful."

It adds: "A concerted effort is needed by all parties to rebuild a more positive relationship between community in Tottenham and the police" and says large numbers "feel Tottenham was left to burn".

The report proposes involving the community in the training of new police recruits in the Haringey borough and calls on the Met to "increase diversity" among its officers.

search and harrass is indeed a racist policy

[bad girls, bad girls, whatcha gonna do?]

During the time of the riots in Tottenham, last summer,
I opined how the government cut-backs to policing
were causing cops to take out their frustration
on the people. That has proven to be true,
but it's worse than I thought.

As it turns out, the law which allows unwarranted
stop-and-search of cars is SECTION 60.

Now section 60 has been proved to have been applied in a
racist manner by police.
and in an indescriminant manner. 6% success rate.
and that success was probably of the broken taillight
variety.
You don't have to tell me that it's racist. Any time I was
in East London at night, the cops were always remonstrating
with South Asian lads in daddy's Merc.

AND! the policy was employed with full-court pressure.
All somebody had to do was ask 'are we done here'
and they'd end up in jail.
So, the riots were not about stop and search, but that
policy, and the murder of a young chav were enough
to open the floodgates.

Checkitout: Guardian
'Racist' stop-and-search powers to be challengedCourt gives woman go-ahead to take controversial section 60 to task over allegations it discriminates against black people
Vikram Dodd, crime correspondent
guardian.co.uk, Friday 8 July 2011 18.47
The high court has agreed that a full legal challenge can be brought against a police stop-and-search power alleged to be used in a racist way against African-Caribbean people.

The challenge follows officers stopping and searching a 37-year-old woman with no convictions, after they claimed she was holding onto her bag in a suspicious way.

The woman, Ann Roberts, ended up being held down by officers on the floor in front of other people, handcuffed and taken to a police station where she was wrongly accused of being a class A drug user and placed on a treatment programme under the threat of arrest if she failed to attend.

Roberts was stopped under section 60 of the 1994 Criminal Justice and Public Order Act, brought in to tackle illegal raves. The power allows police to stop and search people without having a reasonable suspicion they are involved in criminality.

Roberts, a special needs assistant, argued that a disproportionate number of black Londoners are searched in violation of article 14 of the European convention on human rights, which bans discrimination.

Her lawyers say statistical evidence implies that a black person is more than nine times more likely to be searched than a white person. They go on to say section 60 is "incompatible" with three articles of the convention: 14, 5, which protects the right to liberty and security, and 8, which protects the right to private and family life.

Police say section 60 is a valuable tool which has been used to tackle areas plagued by violence.

On 9 September 2010 Roberts was on a bus when an inspector found she had insufficient money for her journey on her prepaid Oyster card.

Police were called when she could not produce identity documents.

According to her lawyers, she was searched under section 60 after a police officer took the view she was holding on to her bag in a manner that suggested she had something to hide.

She was told the area she was in was a "hotspot" for gang violence and the possession of knives. Few, if any, acts of gang violence are committed by married women in their mid 30s.

Roberts asked to be searched in a police station rather than in public in case it was seen by young people with whom she worked.

Police refused and when they tried to seize her handbag a struggle followed which led to officers restraining her on the floor.

Three bank cards with different identities were found in her bag. She explained they were in her name, her maiden name – having recently married – and her son's name.

She was told she was being arrested on suspicion of fraud and taken to Tottenham police station.

She was subjected to a drugs test which she was told showed small amounts of crack cocaine, but a later test showed she was clear.

After being put in a cell, she was interviewed and told she was no longer suspected of fraud but was being detained on suspicion that she had obstructed a police search.

Later a caution was administered for obstruction.

Derivatives: a magic way to hide money

[just ask Monti, a magic GS man]
where’s your money?
Here’s the money.
Where’s your money?
Oops. All gone. Want to play again?

Derivatives can make money disappear, if you want to cry poverty.
and you can make it re-appear if you want to save some money.
That's what Germany did when it needed 55 billion euros.

This was my idea. My blog, about a year ago, had a story
about a derivatives amnesty, because all the players
owe one another the same pot of money. I said they
should all just back out and settle any petty differences
with a cheque or two.

Well, the game is much more cunning than that. Derivatives,
CDOs and CDSs exist to make dark pools and to manipulate the
markets, especially since those dark players can not be
revealed. It's all secret and cloak and dagger.

When they want a crisis, they pull a few strings and BOOM,
we get a crisis.

As Max Keiser says, they always could have done this but now they’re smelling social unrest and just letting the leash out oh so little. As little as possible. Not so that anybody gets encouraged enough to not want to kill all politicians.

CHSmith
Germany "Raises" €55.5 Billion, or 1% Of Its Debt/GDP Ratio, Thanks To Derivative "Accounting Error"Submitted by Tyler Durden on 10/28/2011 21:11 -0500
As usual, the most surreal news of the day, perhaps week, is saved for Friday night, when we learn that Germany has magically raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that "Germany is €55bn richer than it previously thought because of an accounting error at state-owned bank Hypo Real Estate Holding. The mistake at "bad bank" FMS Wertmanagement, happened because collateral for....

blowed up good, that reactor did, two months ago

[BLOWED UP REAL GOOD!- TEPCO STAFF]
[a Nuke Plant- it's just a kettle that occasionally blows off some steam, and waste that lasts 24 000 years.]

Even though blowing up is more of a stock market metaphor,
it still works well for Fukushima.

Those sneaky Japanese waited for us to get distracted by the next disaster
to tell us that one of the reactors had a melt-down, long afterward.
It happened on day 1 of the disaster, 2 months ago

Today the International Atomic agency guys show up ,
and today, TEPCO said that 2 more reactors had melted down.

two months ago!
on day 2 or 3

Good timing
If you were reading Zerohedge, they noticed it within the first week,
from a video!

It would have been funnier for those IAEA guys who promote radioactive
activities to have gone to Fukushima and gotten a lifetime dose in an hour.

[I hear green is in style]

It gets funnier. Apparently, the IAEA also knew what was going on for months (see below),
just like I said in my Liar Liar article.
The first thing they do is lie, and then they lie some more. It's the investments, you see?

-Costick67 ~(8^P

checkitout: 3 things
Japan nuclear plant confirms meltdown of two more reactors
Fukushima Daiichi operator accused of delaying announcement of meltdowns in reactors 2 and 3 as IAEA inspectors arrive
* Justin McCurry in Tokyo
* guardian.co.uk, Tuesday 24 May 2011 09.54 BST
The operator of the Fukushima Daiichi nuclear power plant said fuel rods in two more reactors were likely to have suffered a meltdown soon after they were crippled by the 11 March earthquake and tsunami in north-east Japan.

Confirmation by Tokyo Electric Power (Tepco) that fuel in the cores of reactors 2 and 3 had melted came days after new data confirmed a similar meltdown in reactor 1 about 16 hours after the disaster.

The utility, which last week suffered the biggest annual loss by any Japanese firm outside the financial sector, said most of the melted fuel in all three reactors was covered in water and did not threaten to compound the world's worst nuclear accident since Chernobyl.

...
It said the fuel rods in the reactors 2 and 3 had started melting two to three days after the earthquake and tsunami, which knocked out vital cooling systems.

2 Zerohedge [check the date]
Problems at 6 Japanese Nuclear Reactors ... 2 Have Already Likely Melted Down
Submitted by George Washington on 03/13/2011 02:01 -0400

Early this morning, the Fukushima I nuclear power plant melted down. See this.

Now, MSNBC reports:

A partial meltdown is likely under way at second quake-stricken nuclear reactor [the Fukushima III reactor], Japan's top government spokesman said Sunday.

Fuel rods were briefly exposed and radiation levels briefly rose above the legal limit at the nuclear plant where both reactors are located, said Chief Cabinet Secretary Yukio Edano.

His statement came after Japan's largest electric utility started releasing steam Sunday at the second nuclear reactor while trying to stop a meltdown that began a day earlier in another.

MSNBC also notes that "the government [is] warning there could be an explosion at a second reactor [i.e. plant number 3] crippled by Friday's devastating earthquake."

BBC points out that a meltdown at number 3 could be more serious than number 1, because it uses plutonium as well as uranium:....
3
http://georgewashington2.blogspot.com/2011/05/iaea-knew-within-weeks-of-japanese.html
Wednesday, May 25, 2011
IAEA Knew Within Weeks of Japanese Earthquake that Reactors Had Melted Down ... Public Not Told for a Month and a Half
As I noted last week, reactors 1, 2 and 3 all melted down within hours of the Japanese earthquake.
On Monday, Mainchi Daily News provided an important tidbit:
A meltdown occurred at one of the reactors at the Fukushima No. 1 Nuclear Power Plant three and a half hours after its cooling system started malfunctioning, according to the result of a simulation using "severe accident" analyzing software developed by the Idaho National Laboratory.
Chris Allison [a former manager and technical leader at Idaho National Laboratory], who had actually developed the analysis and simulation software, reported the result to the International Atomic Energy Agency (IAEA) in late March. It was only May 15 when Tokyo Electric Power Co. (TEPCO) admitted for the first time that a meltdown had occurred at the No. 1 reactor at the Fukushima nuclear plant.
According to Allison's report obtained by the Mainichi, the simulation was based on basic data on light-water nuclear reactors at the Laguna Verde Nuclear Power Plant in Mexico that are about the same size as that of the No. 1, 2, and 3 reactors in Fukushima.

According to the simulation, the reactor core started melting about 50 minutes after the emergency core cooling system of the No. 1 reactor stopped functioning and the injection of water into the reactor pressure vessel came to a halt. About an hour and 20 minutes later, the control rod and pipes used to gauge neutrons started melting and falling onto the bottom of the pressure vessel. After about three hours and 20 minutes, most of the melted fuel had piled up on the bottom of the pressure vessel. At the four hour and 20 minute mark, the temperature of the bottom of the pressure vessel had risen to 1,642 degrees Celsius, close to the melting point for the stainless steel lining, probably damaging the pressure vessel.

In other words, the IAEA knew in late March that there was a meltdown. The IAEA informs all of its member states of important nuclear developments.
Government agencies sat on this information, and the world didn't learn the truth until the operator of the stricken reactors itself made the announcement a month and a half later.
This is not entirely surprising given that governments have been covering up nuclear meltdowns for fifty years to protect the nuclear industry.

put me out of my misery

Hillary Clinton. Not the loveliest woman. Never was.
However,
Hillary has aged 5 years in the last 2 months.

I'm a good judge of faces. She hasn't slept more than a couple of hours in about a month.
That can only mean one thing. The US is trying to dream its way out of the impending dollar/debt disaster which is coming. They may be bringing forward a few war plans.

You'll laugh, but they'll try to say that the bank crisis was caused by foreign cyber-terrorists.
Enemy of choice will depend on the risk-benefit analysis.

Iran? China? Venezuela? Cuba?

This is a Pentagon talking point.
Max Keiser was laughing about this, but I have one question for him:

What did Sadam Husein have to do with 911?

We all know he was not involved.

Did it stop the US?

His country was stilled bombed into the Middle Ages.

What difference does the truth make?

No worries, y'all, it will just hasten the US's fall.

Nero also debased the currency of Ancient Rome and kept on spending and fighting foreign wars.
Then Rome fell.

Costick67 ~(8^P
Catherine Fitts says "If liquidity fails, then the US will go to war, covert or overt [On the edge-Max Keiser]. That includes currency war

Pentagon Tries to Blame Financial Crisis on Foreign Financial TerroristsSubmitted by George Washington on 03/01/2011 14:08 -0400
→ Washington’s Blog
The Pentagon is paying contractors to claim that it was foreign financial terrorists - instead of fraud by American financial executives - which caused the 2008 financial crisis.

While a Pentagon contractor said, “This is the equivalent of box cutters on an airplane,” Paul Backen - a Yale University professor who has studied economic warfare, said he saw “no convincing evidence that ‘outside forces’ colluded to bring about the 2008 crisis.”

Indeed, the claim that terrorism caused the financial crisis is about as believable as Gaddafi trying to blame the Libyan protests on Osama Bin Laden, or al-Maliki blaming Al Qaeda for the Iraqi protests.

But it's not an isolated incident. In fact, the government is trying in many ways to convince us that financial fraud is isolated, not systemic, and - most of all - not important to rein in.

For example, the U.S State Department's website says (click on link entitled "economic")"

Economic conspiracy theories are often based on the false, but popular, idea that powerful individuals are motivated overwhelmingly by their desire for wealth, rather than the wide variety of human motivations we all experience.

This one-dimensional, cartoonish view of human nature is at the heart of Marxist ideology, which once held hundreds of millions under its sway.)

If I didn't know better, I would say that the State Department is implying that anyone that questions the intent behind even a particular powerful individual's actions is a conspiracy theorist or a Marxist.

More importantly, Obama's current head of the Office of Information and Regulatory Affairs - and a favored pick for the Supreme Court (Cass Sunstein) - previously:

Defined a conspiracy theory as "an effort to explain some event or practice by reference to the machinations of powerful people, who have also managed to conceal their role."
____________
I wanted to get a later part of this video, where he says the "Pentagon is an anus", but enjoy anyway.

SHE’S THE BAUM

Just as I noted in the spring, the wisdom of a Bath prof about Economists stands. It was expressly by following the dictates of Nobel-prize winning economists that we ended up in this mess.
Caroline Baum is not standing for it, and it got printed in Bloomberg of all places. The underground has come above ground, because everybody knows we're heading for another crash.

Oh, by the way, others are saying it more clearly. Economists were at the cannibalism dinner table. See below.

Costick67 ~(8^P
checkitout: 2 things


1
Goldman's Model Evokes Blood-Sucking Leeches

By Caroline Baum - Mar 3, 2011 12:00 AM GMT
Bloomberg

Economists have been debating the pros and cons of fiscal stimulus since the 1930s, when John Maynard Keynes diagnosed the problem as one of inadequate private investment and prescribed public spending, financed by borrowing, as the cure.
...
In the 1980s, inflation came down, the Berlin Wall came down, economists thought the volatility of the business cycle had come down, and the notion of government as the solution went out of vogue.
...
All it took was a good financial crisis for the Keynesians to come out of the woodwork.
This fundamental disagreement among professional economists about whether government spending helps or hurts represents the state of the art, or science, today. In what other science do practitioners design a treatment plan based on inconclusive proof that the medicine does any good?
There are no control studies in economics, no way to hold everything else constant to determine the impact of one variable, no way to falsify conclusions that models spit out. Financial Times columnist John Kay, writing yesterday about risk modelers, referred to them as “alchemists and quacks.”
As I said before, we entered the 21st century with macroeconomics still looking for an Age of Enlightenment.
Five thousand years ago in ancient Egypt, medics used leeches to suck the blood of ill patients, believing the practice could cure everything from fevers to food poisoning.
Today’s physicians have largely forsaken bloodsuckers for modern medicine. It’s about time macroeconomics emerged from the Dark Ages as well.
2
http://chronicle.com/article/Larry-Summersthe/124790/
October 3, 2010

Larry Summers and the Subversion of EconomicsBy Charles Ferguson

The Obama administration recently announced that Larry Summers is resigning as director of the National Economic Council and will return to Harvard early next year. His imminent departure raises several questions: Who will replace him? What will he do next? But more important, it's a chance to consider the hugely damaging conflicts of interest of the senior academic economists who move among universities, government, and banking.

Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy. For the past two years, I have immersed myself in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial crisis. And I found Summers everywhere I turned.

Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws.

After Summers left the Clinton administration, his candidacy for president of Harvard was championed by his mentor Robert Rubin, a former CEO of Goldman Sachs, who was his boss and predecessor as treasury secretary. Rubin, after leaving the Treasury Department—where he championed the law that made Citigroup's creation legal—became both vice chairman of Citigroup and a powerful member of Harvard's governing board.
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Over the past decade, Summers continued to advocate financial deregulation, both as president of Harvard and as a University Professor after being forced out of the presidency. During this time, Summers became wealthy through consulting and speaking engagements with financial firms. Between 2001 and his entry into the Obama administration, he made more than $20-million from the financial-services industry. (His 2009 federal financial-disclosure form listed his net worth as $17-million to $39-million.)

Summers remained close to Rubin and to Alan Greenspan, a former chairman of the Federal Reserve. When other economists began warning of abuses and systemic risk in the financial system deriving from the environment that Summers, Greenspan, and Rubin had created, Summers mocked and dismissed those warnings. In 2005, at the annual Jackson Hole, Wyo., conference of the world's leading central bankers, the chief economist of the International Monetary Fund, Raghuram Rajan, presented a brilliant paper that constituted the first prominent warning of the coming crisis. Rajan pointed out that the structure of financial-sector compensation, in combination with complex financial products, gave bankers huge cash incentives to take risks with other people's money, while imposing no penalties for any subsequent losses. Rajan warned that this bonus culture rewarded bankers for actions that could destroy their own institutions, or even the entire system, and that this could generate a "full-blown financial crisis" and a "catastrophic meltdown."

When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a "Luddite," dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.).....