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Creative Destruction

The exodus from the casino capitalism producing ever faster and ever deeper crises cannot succeed without a broad and powerful democratic base. Parliamentary democracy is urged to finally take up the struggle around the primacy of politics against the financial markets. Dethroning the financial markets means reducing the speculation businesses.
CREATIVE DESTRUCTION


Why Deutsche Bank & Co Must be Shattered


by Rudolf Hickel


[This article published in March 2012 is translated abridged from the German on the Internet,  http://www.blaetter.de/archiv/jahrgaenge/2012/maerz/schoepferische-zerstoerung. Rudolf Hickel's new book is "Smash the Banks - Dethrone the Financial Markets" (2012).]


The latest financial market crisis is hardly over and the next collapse of the world financial markets is already looming in the course of the Euro crisis. Whether the state can leap into the breach as a rescuer is doubtful for lack of financial power and fading public acceptance. On the other side, the continuing crisis is obviously not enough to finally initiate the necessary radical reform of banks and financial institutes.


Since the end of the 1980s businesses on the financial markets have increasingly freed themselves from businesses of the real production economy and become independent. The volume of all financial transactions is 75-times as high as the total world production. Assets managed by hedge funds, the worldwide capital warehouse, exploded from 1.8 times world production in 1999 to 30.4 times in 2010. Financial markets have nothing to do with the idyll of market competition. The rules of price formation from supply and demand of many small market actors do not play any role. On the contrary, a net of sheer omnipotent suppliers and customers dominates here.


According to a recent study from Switzerland [1], 50 influential mega-corporations within the group of 147 corporations control the world markets. "The circle of the most powerful 50 corporations is a nearly exclusive club of banks, funds and insurance companies" [2]. The contradiction is provocative: "speculation shopping" rules 80 percent of the world economy while their business models are not really accessible to regulatory control. The mega-banks play a central role in this net. At the G20 summit in November 2011, 29 mega-banks were described as system-relevant or too big to fail. In the case of their collapse, the state must leap in the breach to prevent a domino effect on account of the dreaded collateral damages in the total economy.


Their powerful investment banking divisions are at the heart of the criticism of the mega-banks. Measured by their machinations and intrigues, the term investment bank is much too serious. The term speculation bank is more appropriate... In the United States of America in May 2010, 95 percent of the derivative trade concentrated on only five top banks with the lion's share going to J. P. Morgan at 34 percent. In 2009 Goldman Sachs derived the greatest economic benefits from the derivative trade. With its US branch , Deutsche Bank realized 22 percent of its profits. This shows the importance of these "fraud businesses" for banks rated as system relevant.


Dethroning the crisis-prone self-destructive financial markets means reducing the speculation businesses on the financial markets. For example, businesses in the future should have the possibility of ensuring themselves against exchange rate risks arising in production. Bets on future changes of exchange rates should be prohibited... The acute dependence of the state on the interests of the financial markets would be reduced significantly.


BANK CRISIS AS GRAVITATION CENTER


The permanent financing of the productive economy and its protection against risks was no longer central for these banks. Rather the creation of speculative securities separated from real production is at the heart of their activity. Without customers' orders (and knowledge), billions are realized in profits or billions are lost in bets. The running time of these transactions is less than 60 days. Alongside the official speculation divisions and investment banks, there are shadow banks and hedge funds outside of regulation and controls that bet on high speculative profits.


All of a sudden the financial market crisis underscores the necessity of a fundamental reorganization of the banking system. The bank crisis turned out to be the gravitation center of the general economic crisis. The crash of the financial markets was not limited to the offender banks. The other serious banks that really have nothing to do with investment banking were affected as in an extensive fire. Therefore great mistrust prevails today among the banks. The short-term lending of money between the banks, the inter-bank market, has broken down. This massive loss of trust among the banks repeatedly forced the European Central Bank to supply unconventional liquidity. In December 2011 the greatest money injection occurred with 500 billion Euros to counteract the banks' failure to award credit to the economy.


The writing off of the financial institutes transported the speculation crisis to the real economy. Businesses that depend on foreign financing must pay higher interests or cannot obtain any credits any more. This so-called credit crunch threatens entrepreneurial readiness for investment, economic growth and jobs. A fatal extortioner situation arises to avoid the total economic fall. The impacted states see themselves forced to rescue those banks that caused this crisis.


A clear market failure is presented here. Therefore a radical change on the financial markets is indispensable. However hardly anything of that can be seen today. The announcements of national and international politics have hardly any effect. Political failure follows market failure. The foundations of the banking system and of the western capitalist economic model are threatened. This vicious circle can only be removed by shattering the dominant banking system. Shattering means creating a way into a future-friendly banking system. "Creative destruction" is the creation of new out of old structures [3]. Banks serving the economy and society over against the threatening speculative businesses must be the goal. Therefore the necessary shattering has to concentrate on the mega-banks with their investment segments. They stand at the top of the hierarchy of the bank system and form the center of crisis production.


THE PERPETRATORS OF THE CRISIS


The mammoth financial institutes with their speculative divisions actually do not deserve the title banks any more. The causes, driving forces and interests behind the financial market crisis are known today; the main culprits and perpetrators of the crisis can be named. A commission of the US Senate meticulously analyzed this in a 650-page report with 2849 footnotes after a hearing with over 150 witnesses. The greatest failure of financial market history was illumined under the title "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse." [4]


The chairperson of this sub-commission of the US Senate, Carl Levin, reached a bitter conclusion after his exhaustive work in penetrating the Wild West of financial markets. "In our investigations, we have come upon a snake pit full of greed, conflicts of interest and misdeeds." As the main culprit, the report names the banks Goldman Sachs and Washington Mutual, the rating agencies Moody's and Standard & Poors as well as the US bank monitoring OTS. Those politicians with responsibility for the regulatory failure were among the direct perpetrators who carried out their businesses legally but often beyond the limits of law and justice.


In the Hall of Shame are found: Bill Clinton who began a deregulation of the US financial markets with the abolition of the 1932 Glass-Steagal Act, George Bush, Henry Paulsen who moved from Goldman Sachs into the Treasury Department, Lloyd Blankfein, later head of Goldman Sachs, the hardly known but influential hedge fund manager Ralf Cioffi, the chairman of the board of Lehman Brothers Richard Fuld, the mega-speculator Warren Buffet and many others.


The totally overrated chairman of the Federal Reserve Alan Greenspan celebrated for years as a guru should be counted among the perpetrators. He was the one who flooded the markets with the instruments of the American Federal Reserve after the fall of the New Economy and the terrorist attacks on the US on September 11, 2001. From a macro-economic perspective, this was necessary to contain the fall of the economy. However the arising liquidity was virtually lost on the deregulated financial markets. Greenspan preached the terribly naive dogma of the efficient and optimal financial markets. On the other hand, the right combination would be the macro-economic flooding of the markets with fresh money along with simultaneous regulation of the financial markets.


GLOBAL FRAUDSTER DEUTSCHE BANK


Deutsche Bank fulfilled its claim as a global player on Wall Street. A chapter is devoted to Deutsche Bank in the final report of the US Senate subcommittee. "The bank sold inferior bonds."...


In criminal history, Charles Ponzi (1882-1949) was regarded as the discovered of the snowball system. The promised customer profits were actually realized through the constant creation of new highly speculative "products."


The classic example for the dubious businesses of Deutsche Bank on Wall Street is the artificial product Gemstone 7. 115 RMBS-loans were bundled [5]. Residential Mortgage-Backed Securities (RMBS) involved a segment of the securities market...


ONLY PROFIT COUNTS...


DEUTSCHE BANK IN THE "HALL OF SHAME"...


"TOO BIG TO FAIL": HOW DO WE COME OUT OF THE CRISIS?


At the end is the question whether and how a possible new bank crisis can be stopped. Many instruments and measures to strip the financial markets of power and tame the global players are offered by the unvarnished analysis of the US Senate subcommittee on "Anatomy of the Financial Market Collapse." The profit potential from the shriveled gambling business would be decisively reduced if the worst speculative products and over-the-counter trade would be prohibited for banks. Exorbitant profit rates would not be realized any more; the system-endangering causal agents of the financial market crisis would be stopped. This dethronement of the international mega-banks would be an important contribution to regaining the primacy of democratic power. A considerable stripping of power of the chief executives would be a direct result of this scaling down. The interest in advice of no longer system-relevant bankers would fade; the economic power-base would be taken away from lobby work. This liberating blow can only strengthen democratic politics. Up to now we were still far from that - internationally and nationally.


To really break the power of speculative banks, the banking functions must be screened from all businesses in the realm of investment banking. Commercial banks should be uncoupled from the potential dangers of speculation banks. All derivative businesses must be handled through a registered and controlled trading platform. Commercial customers should never be burdened again with the costs of burst speculative businesses. The deregulation of financial markets carried out in the last 30 years made speculation profits first explode and must be revoked unconditionally.


This has not happened. On the contrary, the power of banks and financial investors has even increased, not decreased, owing to the latest financial market crisis. Despite the promises of politics at the G20 summits, the omnipotence on the financial markets was even extended and intensified. In a March 2011 study, a group of researchers from the International Monetary Fund described the increased power of the financial markets over the economy and politics as follows: On one hand, the increased potential crisis can lead quickly into a new crash. On the other hand, state financing of bailout measures cannot be expected any more since the states completely burnt out with the last bailout. The chief economist of the IMF Oliver Blanchard wrote to the G20: "Many of the structural characteristics that contributed to the genesis of systemic risks are still present" [11]. The first regulations to limit speculative businesses of the mega-banks led to evasive actions. Dangerous shadow banks were created with hedge funds at their center. These shadow banks must be dissolved immediately through regulations. This vicious circle in which the perpetrators of the financial market crises could count on their political rescue - if the state rescuers were still strong enough - to continue their high-risk businesses must be finally broken.


SWEDEN AS A MODEL


Sweden could be an example. This country is regarded as a model for a successful bank bailout. When important banks could no longer survive by their own strength at the beginning of the 1990s, the Swedish government created institutes comparable to a Bad Bank. They could buy troubled securities to relieve the balance sheets of the financial institutes. For a while, money houses were completely taken over in state ownership to be restructured and later sold again. To the surprise of many, the bank crisis was overcome in Sweden much faster than originally expected. The bad banks granted 15 years to resell the financial market securities could be broken up after four years. Clear political rules helped greatly. The institutes also cooperated with external advisers who blocked the new chase for risky business fields.


The Swedish bank bailout at the beginning of the 1990s was carried out in a more positive environment than in today's global financial market crisis. Nevertheless three crucial lessons can be drawn for a successful bank bailout: temporary nationalization, strict regulation and restriction to the core business.


That kind of conclusion is not in sight in Germany. There were several temporary glimmers of hope. For a brief phase, the German government facing the material force of the 2008 crisis did almost everything right. The neoliberal dogmatic was at least temporarily canceled with the change to an economic policy that shortly before had been taboo. A fast end to the economic crash and the turn to an upswing followed. That employees were available for the upswing can be ascribed to the social alliance and its short-time worker rule. A change to a mixture of the neoliberal upswing dogmatic and muddling through looms on the horizon. A new overpowering potential crisis grows on account of deficient courage for a decisive policy of dethroning the financial markets.


THE STICKING POINT


Trade without customer orders and knowledge in which banks lose all relation to customers is very dangerous. In this way, an enormous risk of the banks is produced that burdens customers with liability in case of crisis and forces the state to bailout actions without further appeal. Only in a radical reorganization can the real economy and financial management be brought into a healthy relation to each other.


The devaluation of the production economy by financial market capitalism today is clear by comparing it with the "Rhine capitalism" of the Bonn Republic. In this capitalism variant, the realized profit of the deployed capital was defined by the conditions of the production enterprise. The claims for the pay of employees, the working conditions and the investments and innovations for safeguarding the location were considered. However the funds dominant in financial capitalism try for excessive profit rates in the interest of their investors. If a business was successful in the past with a profit of five percent, the funds in the financial markets sought 15 or 20 percent for their engagement - only for the prosperity of the fund investors. Since many businesses of the production economy depend on the money-capital of the financial markets, they see themselves forced to radical cost-savings - at the expense of employees and customers.


FOR THE PRIMACY OF POLITICS - AND THE REAL ECONOMY


The dethronement of the financial markets serves the goal of regaining the rule of the production economy over profit realization and gaining economic value creation. Only limiting the financial markets to their serving function can correct the hierarchy of the markets. Financial management defeats the real economy. Investment decisions on the financial markets now dominate the commodity- and labor markets. With the dethronement of the financial markets, these would finally be subordinated to entrepreneurial investment decisions.


The will to tame the financial markets and the shattering of speculation banks provoke massive resistance by the lobbyists of the financial oligarchy. The struggle against the Volcker initiative and David Cameron's opposition to regulation plans in the European Union are examples. Barack Obama's well-intentioned plan for a fundamental reform of the banking system was long upended by his adversaries. The exodus from the casino capitalism producing ever faster and ever deeper crises cannot succeed without a broad and powerful democratic base.


This is also true for Germany. Parliamentary democracy together with its assailed parties is urged to finally take up the struggle around the primacy of politics against the financial markets. Parliamentary democracy urgently needs support from broad circles of the population, from unions, churches, associations and new social movements like Occupy. Only in this way can the necessary critical mass gather to really break the power of the financial markets in favor of democratic reforms.


NOTES


[1] Stefania Vitali, James B. Glattgelder, Stefano Battiston, The network of global corporate contol, in: „arXIv preprint", 19.9.2011.
[2] Daniel Baumann und Jakob Schlandt, 147 Firmen kontrollieren die Welt, in: „Berliner Zeitung", S. 9.
[3] Joseph Alois Schumpeter, Kapitalismus, Sozialismus und Demokratie, München 1980, S. 137 f.
[4] United States Senate, Permanent Subcommittee of Investigations, Wallstreet and the Financial Crises. Anatomy of a Financial Collapse. Majority and Minority Staff Report, 13.4.2011.
[5] Vgl. die gute Beschreibung dieser ansonsten sehr schwer zugänglichen Geschäfte von Marc Pitzke, US-Bericht zur Finanzkrise. Ohrfeige für die Deutsche Raffgierbank, in: „Spiegel Online", 15.4.2011.
[6] Vgl. den Beitrag von Joachim Zimmermann, Resiliente Geschäftsmodelle für die Kreditwirtschaft - ein Weg jenseits von Basel III und mehr Regulierung", in: „ifo Schnelldienst", 22/2011.
[7] Vgl. Harald Schumann, Das Brot an den Börsen: Wetten auf Hunger, in: „Blätter", 12/2011, S. 65-77; ders. Die Hungermacher, in: „Blätter", 2/2012, S. 101-110.
[8] Interview mit Simon Johnson, „Ackermann ist gefährlich", in: „die tageszeitung", 13.4.2011.
[9] Verunsicherung der bürgerlichen Mitte, Rede von Josef Ackermann, in: „Handelsblatt", 8.9.2011. 
[10] Deutsche Bank prophezeit niedrigere Renditen, in: „Spiegel Online", 5.12.2011.
[11] Dietmar Neuerer, Schließung bei Schieflage: Ruf nach deutlich schärferer Bankenregulierung, in: „Handelsblatt", 11.3.2011; zu den Grundlagen vgl. Stijn Claessens u.a., Crisis Management and Resolution. Early Lessons from the Financial Crises, in: „IMF-Staff Discussion Notes", 11/05, 9.3.2011.
[12] Auch Verbrauchervertreter kritisieren die vielen, kaum mehr durchschaubaren Details.
 ________________________________________________________________________________

RELATED LINKS AND NOTES:

THE DIABOLICAL HAND - JOSEPH VOGL ON THE DEMYSTIFICATION OF THE MARKET

Despite all the crises that have shaken the world economy and financial system, the idea still appears to be widespread that the market is not only a place of rational adjustment but also of self-stabilizing forces. Large parts of economics and finance are based on this assumption. In his essay "Das Gespenst des Kapitals" (The Spectre of Capital), Joseph Vogl analyses our knowledge of the economy and asks, how in the face of the crises of the market can we speak of the economic world as a sensible and rational system?
The capitalist economic system is based on the idea that the market economy is self-regulative and develops self-stabilizing forces. According to the theory, supply and demand are adjusted to one another by the price and goods are efficiently and justly distributed. The state should intervene only in the case of so-called market failure, as for example with cultural institutions. Apart from these exceptions, the market economy is regarded as the most efficient form of the organization of exchange relations. Crises are explained not by causes within the system itself, but by market-external factors such as mistaken economic policy.
 http://www.goethe.de/ges/soz/wsc/en8109960.htm


MANIFESTO FOR A PLURALISTIC TEACHING IN ECONOMICS!

 http://www.paecon.net/PAEReview/wholeissues/issue5.htm

 http://www.paecon.net/PAEReview/

 http://www.booksandideas.net/IMG/pdf/20120710_bessisen.pdf

www.adbusters.org

"Political Economy of Bubbles," Edward Fullbrook
 http://www.paecon.net/PAEReview/issue59/Fullbrook59.pdf

"Manifesto of the appalled economists," 2010
 http://www.paecon.net/PAEReview/issue54/Manifesto54.pdf



FREE INTERNET BOOK: "THE SYSTEMIC CRISIS OF THE EURO - TRUE CAUSES AND EFFECTIVE THERAPIES," by Heiner Flassbeck and Costas Lapavitsas, Rosa Luxemburg Foundation, 44 pp, May 2013

The European Economic and Monetary Union (EMU) is in deep crisis, and an increasing number of observers question the ability of EMU to survive this crisis. What has gone wrong? Are the diagnoses commonly offered valid? Why do the medicines that have been prescribed not work? Could it really be possible that European politics at the highest level fails to understand the cause of the crisis and to address it with a consistent plan?
In order to find persuasive answers to these questions it is necessary to go back to the origins of monetary union and to identify the constructional defects that have burdened its existence from the very beginning up to the point of make or break that it reached after the big financial crisis and the great recession of 2008 and 2009
 link to www.rosalux.de

homepage: homepage: http://www.freembtranslations.net
address: address: http://www.paecon.net


Financing 20.May.2013 12:15

Fidelity

A couple things are provided here that don't make much sense and are obfuscating the important issues:

"The deregulation of financial markets carried out in the last 30 years made speculation profits first explode and must be revoked unconditionally."

First, what banking system are we talking about? The American banking system went through a massive deregulation, notably with the appeal of the Glass-Steagal Act. However, international banks were not affected by Glass-Steagal - so how can American political decisions, that affect only American banking institutions, translate to a political crises in Europe?

The author politely side-steps this problem and assumes a commonality, but this is misleading; let's identify the problem for what it is: debt.

Western banks overloaded nations and people with more debt than they could possibly repay: whether this was a mortgage or a car loan or a credit card or student loan, or whether it was Ponzi-scheme Public Pension system that was impossible to pay. Un-repayable debt was the problem. This un-repayable debt was bundled with repayable debt and passed around hot-potato style: as long as it could be traded it was valuable, when it couldn't be traded it wasn't valuable. It's like if I gave you a box and on the outside of the box I wrote "Gold" you might be able to trade that box to another fool who assumes (without opening the box) that it's full of gold, everyone will keep passing that box until someone looks inside and realizes that I just took a shit in that box, and my shit isn't made of gold. That's what wall street was doing: passing around a bunch of shit and calling it AAA+ rated gold.

"To really break the power of speculative banks, the banking functions must be screened from all businesses in the realm of investment banking"

I can agree that it's probably not the best idea for a bank to be involved in speculation, but that's the fault of all banks. There's no reason for the government to mandate what banks should or could do with their money - it makes more sense for government to educate the public about what banks are doing with their money, and let the public pick where they want to put their money. A regular person looking for a savings account or a retirement account is probably going to seek a more stable institution - the problem is that banks were perceived as stable, when in fact they were over-invested in risky markets.

The problem wasn't regulation, the problem was public perception. In reality, only a small number of the major banks had over extended themselves, several banks didn't need a bailout because their management teams were wise enough to diversify their financial assets. A few banks desired short-term returns so much that they failed to diversify with lower-profit stable assets, and in the end, it worked out for them when they were bailed out. So what lesson did these "bad" bankers learn..?

New/reintroducing regulation isn't necessary when the public creates/has a demand: this is the fundamental element of market economics.. Many banks have increased their transparency about financial investments in the hopes of courting intelligent customers who understand and want stability. So, even without regulation, without the reinstatement of Glass-Steagal, the market has gone about adjusting and fixing itself. In 12 months things will probably change around, but that's a comment for another time.

Here's the most puzzling part of this article:

"[Sweden] is regarded as a model for a successful bank bailout."

Bailing out the banks was not the right thing to do. It's wrong from just about every economic perspective besides that of a Fascist, National Socialist perspective. Hence: the Swedish and Germans agree!

The most predominate theory of economics, what is often referred to (correctly or incorrectly) as Capitalism, would demand no state intervention in the private businesses - hence, these banks would have failed. What does "failing" actually look like? Well, customers with up to $250,000 in the bank would be fine (covered by federal insurance), anything above and beyond could be lost. So, if Wells Fargo collapsed, and I had $1,600 in my savings account and $800 in my checking account, I would in theory get a check from $2,400 from the FDIC. I'd be just fine, sans a short period of borrowing money from friend/family and begging my landlord not to kick me out. If I had a $100k mortgage with Wells Fargo (assuming they even actually had the promissory note), they would have sold it to Bank of America as part of their collapse, and it's likely that my debt would remained the same, and I'd get a letter from Wells Fargo and Bank of America explaining that I need to send payments to a new address. If Bank of America was wise (ha!), they'd probably contact me and want to refinance it in such a way that I could actually make payments, so if BoA bought the promissory note for $45k, they might offer me a deal to repay $60k, because they know I can actually do that. These "toxic debts" all could have been fixed in this way, but it would have been ugly and a horrid process, but companies would have taken it on.

Another theory, not so much economical but socio-political, is that consumers should have been "bailed out" - i.e., the government just cutting a check to customers of the banks rather than to the banks themselves. Of course, this comes with complex ethical and moral challenges: who gets a check? Where does that money come from? If I wasn't stupid and didn't buy a $350k house while making $25k a year, I have to pay part of my taxes to some dipshit who did? It would seem that this theory rewards stupidity - but, when such a huge portion of Americans are fooled, it makes me wonder if it was stupidity or deceit - probably a combination of both. Alternatively the government could have just "relieved" some of this un-repayable debt, perhaps by the government creating a system to absorb debt from consumers on a case-by-case basis, like a court. This would have increased consumer spending power, strengthening the economy.

Either of these two options would have led to more economic prosperity than we are experiencing now. If I had $100k loan back with Wells Fargo, there would be a promissory note (an agreement to pay) $100k. If I couldn't afford to make payments towards any of that debt, then I still owe that money - even though that promissory note has been bought by the Federal Reserve, and there is literally no one in the world who is depending upon my $100k being repaid. From an accounting perspective, it doesn't make any sense - Yet, here we are.

Here's the most blindly stupid part of the article:

"Barack Obama's well-intentioned plan for a fundamental reform of the banking system was long upended by his adversaries."

Yes, tell me more about Barack Obama's well-intentioned plans that never work...

(f)Fidelity 20.May.2013 12:42

kl;

You wrote
"First, what banking system are we talking about? The American banking system went through a massive deregulation, notably with the appeal of the Glass-Steagal Act. However, international banks were not affected by Glass-Steagal - so how can American political decisions, that affect only American banking institutions, translate to a political crises in Europe?"

I know you are not this stupid, so your comment is intentionally misleading (lying).

This would be like saying, "how can an infection in the foot affect the brain." They are all connected, the global economy means that a problem in one place effects all the others to some extent, and the pus tends to run out everywhere (fidelity).

.... 20.May.2013 13:45

Fidelity

I don't think you read the article, you're just commenting anywhere I comment. This is kind of sad, but also hilarious, at least to me.

The OP's article starts by examining European banks and the world economy, and the author's examination of faults comes from a US Senate report that was myopic to the US economy. Please explain how the repeal of the Glass-Steagall Act, an American policy, changed the behaviors of European banks, specifically Deutsche Bank?

Make me look foolish and short sighted by citing any/all the evidence that supports your opinion.

Fidelity 20.May.2013 14:15

kl;

Evidence for what? That you are a troll and do nothing more than spew conservative rhetoric? I think that is fairly obvious.

Fidelity is a troll 20.May.2013 14:20

kl;

COINTELPRO

Infiltration: Agents and informers did not merely spy on political activists. Their main purpose was to discredit and disrupt. Their very presence served to undermine trust and scare off potential supporters. The FBI and police exploited this fear to smear genuine activists as agents.

 http://en.wikipedia.org/wiki/COINTELPRO

you don't understand what a troll even is 20.May.2013 15:33

Clyde

And if you think Fidelity is spewing a conservative line, you're either a troll yourself, or you have a fundamentally flawed idea of right vs left.

Actually, you might just be a troll AND an idiot. You seem to be a little obsessed with him anyway.

Clyde(fidelity) 20.May.2013 17:52

kl;

Is that you again fidelity? Other wise how would you know that I make a point of pointing out your bullshit.

Oh, the beauty of anonymous posting. If I wanted to act like fidelity, I would just post support of my comments under another name.

As for troll, I don't think fidelity hangs out under bridge (she/he isn't that cool).

Definition of fidelity:

"A concern troll is a false flag pseudonym created by a user whose actual point of view is opposed to the one that the user claims to hold. The concern troll posts in Web forums devoted to its declared point of view and attempts to sway the group's actions or opinions while claiming to share their goals, but with professed "concerns". The goal is to sow fear, uncertainty and doubt within the group."

 http://en.wikipedia.org/wiki/Troll_%28Internet%29

I tried having a discussion with fidelity, but all she/he did was avoid my questions/comments.

(shaking my head) 20.May.2013 23:42

Shaker

Well, Fidelity, I'm sorry that you have to put up with the comments that follow yours, although I have to agree with kl on a single point. I don't know how you can say that foreign banks weren't impacted by the repeal of Glass-Steagal. Any effect may not have been direct, but it sure was indirectly through the mutual, and (thanks to deregulation) expanded mutual business interests and opportunities. Just makes sense, doesn't it?

I just have a comment that I think is appropriate.

What happened, and is still happening, is a deep problem with the view toward and meaning of society. It's not fixed, and won't be fixed, without the common man admitting collusion in this scheme and resolving not to take part anymore. All this talk is reiteration or new twists on ancient themes.

Shake it baby 21.May.2013 06:17

kl;

That you again fidelity?

sure thing dimwit 21.May.2013 07:34

Clyde

I see you following him around like an obsessed teenager because I read this site you colossal idiot. I'm also way less cordial than Fidelity, fuck you very much.

If you think cointelpro involves someone making constructive comments that you just happen to not agree with, you're as much of a nutjob as sosbee. Get it together.

not 'thank you' 21.May.2013 07:46

Shaker

Only the recognition of another and their right to speak, whatever in hell it is. The action you personally take is to ignore them. Any faults become obvious enough, they're entitled to them, and if your contribution is not enough to convince another that they ought not listen, saying it once, especially here, is enough.

Most sentient people recognize a piece of shit in the middle of the sidewalk. Most look, and walk around it. They rarely need to bend down and smell it to make sure, and trashing over and over gives me the idea that you're going back for another sniff. (Sorry. It's just the image that came to mind...)

kl;, it seems you've contributed your factual opposition. Let it go, man, or at least be a bit more creative and inject some humor and imagination into the trash to make it interesting.

Shake it baby 21.May.2013 08:11

kl;

Don't got time. I'm just tired of these conservative assholes dominating what used to be a great site. Now it seems the majority of articles posted are of a conservative bent, so I am making it a point to point out the bullshit. Otherwise the only alternative is to abandon it all to them.

It is strange how the conservative mind cannot allow a difference of opinion. Why are they so afraid?


Controlling Behaviour

Controlling behaviour is often disguised or excused as concern. Concern for your safety, your emotional or mental health, the need to use your time well, or to make sensible decisions. Your abuser may be angry or upset if you are 'late' coming back from work, shopping, visiting friends, etc., even if you told him/her you would be later back than usual. Your abuser may question you closely about where you were, whom you spoke to, the content of every conversation you held, or why you did something he/she was not involved in. As this behaviour gets worse, you may not be allowed to make personal decisions about the house, clothing, going to church or how you spend your time or money or even make you ask for permission to leave the house or room. Alternately, he/she may theoretically allow you your own decisions, but penalise you for making the wrong ones. Concern for our loved ones to a certain extent is normal - trying to control their every move is not.

 http://www.hiddenhurt.co.uk/warning_signs.html

what might help in this conversation 21.May.2013 09:02

Shaker

From:
 http://beginnersinvest.about.com/od/banking/a/investment-bank.htm

...an investment bank is nothing like the corner institution you're used to dealing with to get a business loan or deposit your paycheck. Instead, an investment bank is a special type of financial institution that works primarily in higher finance by helping company access the capital markets (stock market and bond market, for instance) to raise money for expansion or other needs. If Coca-Cola Enterprises wanted to sell $10 billion worth of bonds to build new bottling plants in Asia, an investment bank would help them find buyers for the bonds and handle the paperwork, along with a team of lawyers and accountants...

...Up until ten years ago, investment banks in the United States were not allowed to be part of a larger commercial bank because the activities, although extremely profitable if managed well, posed far more risk than the traditional lending of money done by commercial banks. This was not the case in the rest of the world. Countries such as Switzerland, in fact, often boasted asset management accounts that allowed investors to manage their entire financial life from a single account that combined banking, brokerage, cash management, and credit needs...


A definiton, and one which I might think (though I don't know for sure) the common person knows as common knowledge. I know I didn't, though I'm hardly a genius, until I began to pay attention. It really helps to know what one is talking about concerning banks and their practices, especially in the light of repeal of Glass-Steagal and the part that repeal played in the bubble-blowing that led to this mess and the assumption of the bad debt as citizens and taxpayers. One has to understand that, too, that 'bailing out the banks' wasn't simply that. There is a whole slew of related activities that would have fallen, from pension funds through insurance houses. (Remember AIG?) Congress facilitated this, adding a little more wood to the engine of crony-style meritocracy and insider gangsterism that was the things like the stock market anyway. Honestly even the conservative and libertarian asses that were elected in the backlash don't seem to have a clue as to what would have ensued. (There may be some honest ones, but they're much fewer than claimed. They haven't been any more honest with themselves about the practicality of what they believe than the liberal side in that regard.)

Let me state, too, that I didn't like the bailouts either, but from the point of view of their form, not their function, and the left side of economics wasn't too much better at seeing this happen or proposing a viable solution either. That we're stuck with the criminal practices and economically violent doesn't surprise me, but that's the outcome of most wars. That war has been going on (and is venerated on top of that as something sacred; what a shit scheme) and the whole point of the philosophy is to make one rich or grind them to debt slavery. To me, anyone who doesn't see this is ignorant (as in 'ignore', not as in 'stupid') or paid well enough that they're apathetic. It's quite obvious that the war is centuries old, but one could just as well start with the industrial revolution.

Changing the battle won't help anything. We were here in the trenches celebrating what little spoils of some assumed victory that was given us while the mother of all artillary shells was coming. Ever hear of the unauthorized christmas truce during WWI? Disassociate from the generals, get out of the trenches, and meet the real enemy. They look surprising like 'us'. What kind of war can the generals fight without soldiers? That idea, too, is as old as the war. Makes one think that despite our education and technology, we really haven't gotten too far, have we?

Well... 21.May.2013 10:09

Shaker

Well, I'll agree that it is disturbing about the conservative postings here, the VK Durham postings being the worst. It's pretty obvious that most here ignore them. There are few comments. Fidelity is, though, offering admitted opinion and is willing to discuss it reasonably (that is until it seems he/she gets piqued by things like you posted) while the other is masquerading as news with links in general to other conservative sites. I feel sorry for them (while I don't, really) as in my imagination they're just the conservatives who lost, are pissed about it, and need somewhere, anywhere, to be pissed. Even then, there may be a grain of truth in their posts. I'm just not looking to be sifting their sand to bother. Besides, it would be like going through my cat's litter.

Honestly, I don't care one way or the other, but I do believe that whatever solution is necessary to try and cure our ills needs to be all-inclusive. I'm committed to that personally. That I feel that 'all-inclusive' in regard to this discussion may be some incarceration and loss of fortune is beyond the point I was trying to make.

Shake it baby 21.May.2013 10:23

kl;

Fidelity is not interested about discussing anything.

I tried to discuss her/his "gun" experience. Every point I tried to discuss, she/he just avoided or tried to turn into a personal attack on me.

So the only alternative is to comment on her/his posts about the bullshit content contain there in.

Projection 101 21.May.2013 11:18

James Duval

kl said "Don't got time. I'm just tired of these conservative assholes dominating what used to be a great site. Now it seems the majority of articles posted are of a conservative bent, so I am making it a point to point out the bullshit. Otherwise the only alternative is to abandon it all to them."

Then he/she/it said It is strange how the conservative mind cannot allow a difference of opinion. Why are they so afraid?"

Project much, dipshit? What a maroon!

On Debt, Trolls, and the Right Wing 21.May.2013 13:22

Fidelity

@Clyde - I dispute that you're less cordial than I am, I can be an enormously offensive ass, so much so that my comments end up being censored on this site. Apparently adults are unable to deal with commentary that analogize people to excrement, genitalia, and that employ the word "fuck" too many times. Oh well.

In the case of *this* stalking fan boy, if you perform a google search for "KL" within the scope of Portland.indymedia.org, you'll notice that in most threads the person comments exclusively as a response to my comment, so there's some sort of weird obsession they're dealing with. I'm fine with that: if you want to hear about obsession you should meet my ex-girlfriend! Also, you might recall that this isn't the first or only commentator on Indymedia who has taken on trolling my comments. I'm a big believer that you judge success by the enemies you create, and that the truth is always offensive to someone. So, these things actually encourage me, and the more absurd allegations become, the more humor I find in them. Plus, on the thread in which we first exchanged comments, the commentator kept interjecting curiously relevant details as an afterthought, so I concluded they commentator is dishonest, but that's for other readers to judge for themselves.

If nothing else, there is some learning to take place from some of these trolls, lessons that are very applicable in life and activism: some people are very exclusionary, and rather than listen to contrary view points, they'd rather reinforce their own ideology in a strikingly cultish fashion. We can see evidence of this in partisan groups especially. It would be one thing to refute and converse with a person over a disagreement (a positive thing), it's another thing to dismiss or ignore contrary views (a neutral thing), and it's entirely another to attack and attempt to expel a person based upon their viewpoints (a negative thing). We can also learn that paranoia and other mental health problems are very real, and these people can be parasitic to constructive conversations and social movements, this is something that few activists/groups have tools to deal with. In the long term, demonization of other people based upon their perceived ideology ultimately leads to oppression of those people, so I find bigotry offensive, especially when that bigotry is not based on experience but upon perception, I find that toxic and I don't tolerate it. I've had right wing people problems too: a place where I was doing organizing was actually firebombed 3 times and broken into countless times, to the point where we had to be armed because of death threats, and these threats were coming from combat-hardened DOD personnel, so they weren't a joke - but I don't blame every person who is right wing for these things. I realize that political education is a process, and I've helped people who have deeply rooted toxic beliefs evolve in those beliefs into positive things, ideas that liberals generally hold. With my history anti-war veteran organizing, I've personally witnessed hardcore "right wingers" become the most adamant, inspiring, and uncompromising advocates for justice and equality. So, when someone comes along and is all like "fuck those right wingers" I take offensive to this, even though I don't support right-wing ideology, because what the person is actually saying is "let's oppress those right wingers."

@Shaker - Thank you for the additional information about investment bank. The article you provided a link to even states, "Up until ten years ago, investment banks in the United States were not allowed to be part of a larger commercial bank... This was not the case in the rest of the world." Indeed.

A lot of people have blamed Glass-Steagall for the 2008 collapse, and I think this was part of a Hegelian dialectic solution offered by the popular media. It seems obvious to me that banks underwriting mortgages that were bad and offering credit to people that shouldn't have any credit, these were the decisions that culminated in a meltdown. On an international level we're seeing a massive connection of banks failing in the United States and Europe - but this isn't a problem with investment/asset choices of these institutions, it's a problem with unpayable debts. That's the problem in Greece, the problem in Cyprus, and the problem with most American municipal/state governments, it's the problem with the mortgages, student loans, credit cards... . On and on, debt is the problem.

Back up and look at what Glass-Steagall was intended to do: basically it was to prevent banks using people's checking accounts to purchase risky investments - the bill wasn't about reducing the amount of debt in society, or about tightening credit markets. To understand why Glass Steagal was critical we should look at the Banking Act of 1933, which is the policy that contains the Glass Steagall Act: this policy created the FDIC, so the concern was that these banks would take checking account money (money insured by the FDIC) and invest it into risky bullshit, and that the tax payer would flip the bill via the FDIC when the investments failed. The repeal of this act provided just that: a massive bailout (though not provided by the FDIC). There's a much more complex story, but that's the relevant gist of it, so how/why did that effect a German bank? It didn't of course.

Certainly reinstituting Glass-Steagall is not going to fix the underlying problem of too much debt - so when people focus on this specific solution, it's narrows the possibility of solving the root of the problems. I'm not denying that Glass-Steagall's repeal played an important role in the size and scale of the collapse in America, but I wanted to correct the OP's assertion that Glass-Steagall was a major contributor of an international crises. If we want to build workable solutions, we need to confront ideas that are obfuscating issues so that we can pinpoint the actual problems.

Whoa... 21.May.2013 23:47

Shaker

Did you really think about this sentence?

"On an international level we're seeing a massive connection of banks failing in the United States and Europe - but this isn't a problem with investment/asset choices of these institutions, it's a problem with unpayable debts."

Soemhow investment in instruments tied to that unpayable debt isn't about investment/asset choices?

And then this one:

"The repeal of this act provided just that: a massive bailout (though not provided by the FDIC). There's a much more complex story, but that's the relevant gist of it, so how/why did that effect a German bank?

In the second quote you specifically state how it DID effect a German bank. The bad-risk loans they found that they could bundle into securities and sell them as investment-grade instruments, passing the debt off in other places. (Actually needing to do that for a number of reasons depending upon the institution and what it's legally required to have to cover, even if fractional, that portion of the business. It was common practice before repeal.) At any rate, this method masked the real value and misvalued risk, hiding it from due dilligence of the investor. What were those other places? It's no secret that Deutsche bank and others have been beneficiaries of the bail-out because of the investment instruments that was meant to cover, even if indirectly, just to keep things going.

It was bad debt, but it was facilitated by ignorance and propaganda as well as unscupulous practices, mostly from the investment side such as the lenders themselves to the bond-rating agencies. One can ask what came first, but honest practice and honestly-valued dilligent risk wouldn't have facilitated the loans in the first place. I think that you're pretty horribly mistaken that organizations in light of what happened would have engaged in the 'ugly and horrid process' that you describe as 'fixing' the debt in a meaningful way, though I think it's not worth the effort except to say that the factor of time is missing from your reasoning and that those organization have other investors behind them tapping their feet for their return. Maybe you just don't ask yourself of the other investment sides of their business. Wasn't that the supposed purpose of the bailout, to keep that other side contributing to the economy, and which they found that it didn't, small business finding loans hard to get because the banks were making up for their bad risk decisions? I get the impression they principally have given up on much of the real estate debt, with the Fed buying $45 billion of MBS a month for quite a while now and real lack of a refinancing effort, and the Fed (the taxpayer) is making up for that time factor I mentioned. Just when does one decide that there's easier money to be made elsewhere without coercion or encouragement (government loan guarantees) and to hell with it all? Seems some were quite willing to do that, weren't they? But it was the investment side and attitude of banking that led to such problems, even if banking reform along the lines of Glass-Steagal won't do much now, just as it didn't at the time of its enactment. I personally think that it was more the memory of the great Depression that contributed to the the perception of success of Glass-Steagal, and that we forget quite easily with the passage of time. Even with that said, I think its purpose was fulfilled not in creation of the FDIC, but in creating a solid, reliable foundation of growth that was available to all who might not be worth the bother of strictly an investment organization who might just think that there's better money to be made elsewhere.

Thanks. I learned something despite the crap comments of others. I posted the part about investment banks because I'm not too sure people know the difference, and I wonder if much thought it given to commercial banks delving into credit cards, mutual funds, annuities, etc. I may not be a good foil for your arguements, but, hell, it was fun anyway, and I won't claim to be economically brilliant or typical of the average American in that I don't have debt and don't believe in paying interest. I do know that what we have now after the bailouts is a really contrived mess, which makes me disagree with them even more than I did when orginally begun. And while I know some have been brilliantly stupid, others have also been brilliantly deceptive and encouraged that stupidity. The evidence is there for both the stupidity and its conscious facilitation. I will question where you find justice in this, though I will equally ask if I've interpreted what you've written correctly.

Oh, well...

James Duval 22.May.2013 10:20

kl;

James said:
"What a maroon!"

Maroons (from the Spanish word cimarrón: "fugitive, runaway", lit. "living on mountaintops"; from Spanish cima: "top, summit") were escaped slaves in the West Indies, Central America, South America, and North America, who formed independent settlements. The term can also be applied to their descendants, and the same designation has also become a derivation for the verb "to maroon".

WATCH OUT, YOUR RACISM IS SHOWING!!


You fucking conservative troll (probably fidelity again), how much do they pay you to be this big of an asshole, or does it just come naturally?

......... 22.May.2013 10:42

.........

If Fidelitys a troll or a government informer, then the government probably overestimates how seriously people take the internet. If anyone would be a sabateur it would be my stupid ass. But I'm really just loud and obnoxious. But I take the blows myself for that. It could be worse, I could be cranky and Lebonese (what the fuck did you do to the Lebonese? Jesus.)

@kl You consistently disrupt a convesration over the internet. Fidelity is nothing more than an abstraction here. We all are. Even those "sell your friends out for cash" postings...yeah Isrseli zionist who just went just googled a bunch. Not even Shaback or anything cool (yalla Shaback...its ya boy.) Seriously. Chill out. There are blatantly racist trolls here. Fidelity is like...meh. And once in awhile I agree with him. But its cool, because jts the fucking internet. Statistically speaking you have at least one sex offender as a friend on facebook. Take things as they come.

I am like "Meh" lol :D 22.May.2013 12:14

Fidelity

@Shaker - Yeah, the first sentence you quoted, my sentence, doesn't make much sense, it was poor word choice on my part. To clarify, I intended to say that the investment portfolio and banking securities were a separate issue from offering credit to everyone regardless of their credit worthiness. The credit doors blew open during the early 2000's, whereas mortgage-backed securities being pimped by banks, and the resulting Fannie/Freddie/Ginnie debacle, started back in the 80's. I was just trying to make the point that looking at the financial collapse only through the lens of deregulation is faulty and implementing old solutions won't fix the modern problems - the practice of financing toxic stuff (like loans to unemployed people, or anything that's obviously impossible to repay) is where advocates for financial reform need to focus. It's been explained to me that the financial industry is making more money in the payments and debt-bundled-securities than they do on the principal of the loan: so we're in an age-old quagmire of rich bankers reaping huge profits by providing a disservice to the public. I believe this was the exact same problem that Jesus had with Usury 2,000 years ago...

To clarify my other statement, "it would have been ugly and a horrid process, but companies would have taken it on" I think my poor English, or perhaps shorthanding a big concept, made yet another miscommunication. I was intending to describe how traditional debt collectors would have purchased these debts, as they already do when people default on medical/credit/car/mortgage payments (it didn't help that I used Bank of America as a debt collector example). I've never worked with a "nice" debt collector, I'd only describe my experience with them as "ugly and horrid." I don't know how long it would have taken for debt collectors to refinance all of the toxic mortgages, and I know this would not have been an equitable process for the public at large, but we can see that debt collectors are functional in our macro-economy. Regarding "the other investor" "tapping their feet for a return", first it's important to recognize that the "other investor" would be up shit's creek for making such a bad investment, and second, that our existing debt-collector industry will buy the promissory note from the bank or holding entity, so the investor would be paid (though, probably without the same returns they were expecting). I don't support this process, I was just trying to describe the economic theory being promoted by "free market" folks.

Where do I find justice? As in: which process to fix it all do I endorse? I don't find justice in any of this for a couple reasons. First, I think we're still riding on high, and that a much bigger collapse is going to come in just a few years. The president of the California Federal Reserve gave a speech up here in Portland last week, and Obama has been echoing these same sentiments: that the "scare" is over, and that "housing prices are rebounding" and the "economy is back", yada yada yada. Basically, they're trying to reintroduce the conditions (at least the perception of the conditions) before the 2007 collapse. If Obama is able to stay in office, I think short-sighted bad lending will be reintroduced again, maybe not to the degree in which we saw before, but this needs to happen in order for our financial markets to stay floating, and because these useless financial markets make up such a huge portion of the American economy, the President and elites have an imperative to pimp these lies. That's problem #1 we don't explore often: the world is dependent upon financial markets.

Another reason there's no justice anywhere is because the public hasn't done a great job demanding it, and activists have really struggled to hone anger on specifically the banks, even though 80+% of people had a vehement foaming hatred of bankers. OWS's message didn't resonate with like 2/3rds of this country even at it's peak, and that was a massive failure. This is also amplified by the clear injustice that no one, absolutely no one, has been pinpointed for fault and no one has been accused of a crime. For me, I don't think the process of how to fix the economy is nearly as important as killing someone because they fucks us all over. Have you ever read Cato's Letters? #3 is what's applicable, but perhaps the first 10 are critical in these times:

"Well; but monsters as they are, what would you do with them? The answer is short and at hand, hang them; for, whatever they deserve, I would have no new tortures invented, nor any new death devised. In this, I think, I shew moderation; let them only be hanged, but hanged speedily. As to their wealth, as it is the manifest plunder of the people, let it be restored to the people, and let the publick be their heirs; the only method by which the publick is ever like to get millions by them, or indeed any thing."

....

"I am told, that some of them have the face to pretend, that they ought not to be put to death; but we hope that the legislature will effectually convince them, that this their partiality to themselves is groundless: All their hopes of safety must consist in their money; and without question, they will try to make the wages of their villainy protect their villainy. But I cannot see how any sums can save them; for as they have robbed and cheated all men, except their accomplices, so all men are concerned to see justice done to themselves; and if the ordinary channels of justice could be stopped by bags of money, or by partnership in original guilt, the enraged, the abused people, might be prompted by their uppermost passion, and having their resentment heightened by disappointment, might, it is to be feared, have recourse to extraordinary ways; ways that are often successful, tho' never justifiable."

We basically need to hang a bunch of bankers in the public square, that's where I see the justice. Bail out whoever or whatever, I'm no economist, I don't endorse any of these theories: just kill some bankers. If we don't, they'll do it again. The same needs to happen with LIBOR perpetrators, which was yet another spectacular crime that is unimaginable in scale. Would LIBOR manipulation continue happening if Jamie Diamond and 20 of his chums were hanged in Zuccotti Park back in 2008? I doubt it, but that's just my theory. Unfortunately the taste for populist justice has passed, so hanging a banker isn't possible right now, but maybe 2015? One can hope.

Are you two(or just fidelity) the little crazy haired trolls? 23.May.2013 08:42

kl;

The amount of time you spend trying to convince everyone that you are not a troll just shows us how much your fidelity persona means to you. You spend all of this time trying to establish a background and some kind of anonymous internet credibility and then some punk comes along and starts destroying it. All of your work going down the drain. You might have other persona's to use, but you spent all of the time creating "Fidelity". And it is the closest to being part of some community (not really). And the part you really hate, is that I don't have any proof, because you are anonymous, but by paying attention to what you post, your true beliefs have become clear, and all it takes is the suspicion and suddenly everyone will start ignoring you posts. The effectiveness of your fidelity persona is gone. Now you have to create a new one.

@kl projection 101 redux 23.May.2013 20:43

James Duval

Racism showing???? LOL, and the asshole plays the fucking race card. Can't argue the point, flip, out comes the race card. What a fucking maroon. In your case maroon means asshole, and juvenile moron. I point out your hypocrisy and you call me a paid conservative troll. You and geral sosbee must be brothers, LOL.

Quit projecting being a troll on me, dumb ass, cause if there is a troll on this thread it's you.