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Jim Cook

 

RUNAWAY SOCIAL SYMPATHY

Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

 
Best of Andy Sutton
December 9, 2010
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Back in April of this year, Will Hutton of the London Observer wrote:

“The global financial crisis, it is now clear, was caused not just by the bankers’ colossal mismanagement. No, it was due also to the new financial complexity offering up the opportunity for widespread, systemic fraud. Friday’s announcement that the world’s most famous investment bank, Goldman Sachs, is to face civil charges for fraud brought by the American regulator is but the latest of a series of investigations that have been launched, arrests made and charges made against financial institutions around the world. Big Finance in the 21st century turns out to have been Big Fraud. Yet Britain, centre of the world financial system, has not yet leveled charges against any bank; all that we’ve seen is the allegation of a high-level insider dealing ring which, embarrassingly, involves a banker advising the government. We have to live with the fiction that our banks and bankers are whiter than white, and any attempt to investigate them and their institutions will lead to a mass exodus to the mountains of Switzerland. The politicians of the Labour and Tory party alike are Bambis amid the wolves.

Just consider the roll call beyond Goldman Sachs. In Ireland Sean Fitzpatrick, the ex-chair of the Anglo Irish bank – a bank which looks after the Post Office’s financial services – was arrested last month and questioned over alleged fraud. In Iceland last week a dossier assembled by its parliament on the Icelandic banks – huge lenders in Britain – was handed to its public prosecution service. A court-appointed examiner found that collapsed investment bank Lehman knowingly manipulated its balance sheet to make it look stronger than it was – accounts originally audited by the British firm Ernst and Young and given the legal green light by the British firm Linklaters. In Switzerland UBS has been defending itself from the US’s Inland Revenue Service for allegedly running 17,000 offshore accounts to evade tax. Be sure there are more revelations to come – except in saintly Britain.”

Hutton pretty much summed up what most of the sentiment here in the US is: The crisis of 2008 is starting to stink – bad. Remember that, at the time, the Fed assured everyone that it was saving the financial system. How many companies did the Fed end up buying CP from anyway? I don’t think for a minute that we even NOW have the full story on what went on. And that begs the question how many other firms were allowed to languish and become ripe for government takeover. Not to mention the small businesses that didn’t have access to the Fed’s supposed charity. And they still don’t since many are still unable to get credit, except via their small business credit cards and the accompanying astronomical rates. More than two years after the beginning of the credit crunch, this situation has still not been resolved. This is allowed to continue while banks rake in huge profits by skinning fractions of pennies from each other by front-running transactions on the exchanges. The same folks have been amassing huge reserves at the Fed itself. I have been begging people to ask the important questions for two years now: Where did the bailout money go? We now have what at best can be considered a partial answer there. Why is the Fed paying banks to keep reserves at the central bank and incentivizing them to do so by paying interest? This is a very important question given the fact that Bernanke’s talking points have centered on making credit available to small businesses!

There are two main (and possibly more) reasons for this accumulation of reserves. The first is that banks are lying through their teeth and expect further massive losses from bad loans, bad bets, and trillions more in OTC derivative beatings. The second potential reason is that banks (and the Fed) are preparing for a fire sale of the American economy. This is by far the worst of the two scenarios and would fall squarely into the category of a financial coup d’ etat.