In the more than six years
since the 2008 Wall Street crash, nothing has been done to rein in the abuses
of the parasites in pin stripes that were its cause. Another crash is
inevitable.
My guess is, it will come in
late 2016, when the banksters have selected the candidate for president that
will be as dependable an ally as the incumbent he or she will replace, as they
did in 2008, to insure maximum political protection.
But it could come sooner,
unscripted, set off perhaps by a bad bet in the almost $300 trillion
derivatives casino. But whenever it comes, what happens next? Another panic on
Wall Street, the banksters desperate to call in their bets and not be the one
left standing when the music stops, forced into bankruptcy?
Down to their last $20
million, stashed away in some Swiss or Cayman Island bank. Not a chance. Give
the devil his due. Understanding that in the next crash, the American people
would crucify any president or member of Congress that approves another bail
out, the banksters have set up an automatic bail out, which will be called by
other names.
Step One. At the November
meeting of the G20, the leaders of the developed nations put in place a new
global banking policy, the confiscation of deposits in the event of the next
crash, called in the media a “bail in.”
It wasn’t called either of
those terms by the G20, just a responsible sounding policy developed by the
global banking bureaucracy to guarantee “global financial stability” — meaning
whatever happens next, their bankster bosses stay rich.
But the banksters know the
next crash will be bigger than the last, and confiscating deposits alone may
not do the trick.
Step Two. In the week before
Christmas, Wall Street got their errand boys in Congress and the White House to
enact legislation that allows them, as Pam Martens explained on her web site,
Wall Street on Parade, “to keep their riskiest assets — interest rate swaps and
other derivatives — in the banking unit that is backstopped with FDIC deposit
insurance, which is, in turn, backstopped by the U.S. taxpayer, thus ensuring
another bailout the next time [Wall Street] blows itself up with bad bets” in
its derivatives casino.
The Office of Controller of
the Currency reports $25 billion in FDIC insurance, against $9,283 billion in
total US deposits, and derivative exposure among the top 25 banks of $297,514
billion — nearly $300 trillion.
A failure of any one the
mega banks could wipe out the FDIC, leaving depositors in the other mega banks
and the 6,000 smaller, community banks unprotected, forcing Congress and the
president to bail out the FDIC.
You gotta admit, from the
point of view of a Wall Street errand boy in Washington, this is a thing of
beauty. Not only will the Congress and president not have to approve either the
bail in or the back door bail out – they will be automatic, a matter of statute
law — but then, they get to ride to the rescue of millions of threatened and
frightened depositors by saving, not Wall Street, but the FDIC and their
deposits. Or as much of them as remain
after the bail in.
Municipal deposits are at
even greater risk. They are not insured by anything, except the good faith of
the banks that hold them and the collateral that these banks say they have to
cover them.
The same banks that hold the
derivatives hold the largest municipal deposits. And the collateral? It has
been “re-hypothecated” — meaning pledged and re-pledged down the chain of Wall
Street’s derivative deals. And when the music stops, the municipalities that
thought they had a claim on that collateral will be standing in a long line,
for a long time, in bankruptcy court, fighting for pennies on the dollar.
I said this catastrophe is
inevitable, but perhaps not. We will know soon. When the Congress reconvenes it
can take the first step to protect the financial security of the American
people, by repealing the back door bail out it enacted in December.
It was a close vote, in
the House especially, 219 for Wall Street and 206 for Main Street, a matter of
changing seven votes.
And some brave souls in
the Congress do want to make that fight. Republican and Democratic senators
from Massachusetts, Connecticut, New Jersey, West Virginia, Louisiana, Ohio,
Michigan, Washington State and Oregon took to the Senate floor in outrage.
Congressman Kevin Yoder is
the Wall Street errand boy from Kansas who slipped the back door bail out
language into the “Cromnibus” spending bill; language written by a Citicorp
lobbyist, as reported by the New York Times and Mother Jones. It may have been
hidden from the view of the American people, but in was in plain sight to
members of Congress.
Yoder got pummeled by
Kansas newspapers and constituents posting on his Facebook page. One called
Yoder the “lowest of the low” and added, “Hope you burn in hell.” Another
called Yoder “one greedy immoral coward.” Gotta love Kansas.
So we shall soon see once
for all whose side Congress and the administration are on, Wall Street or Main
Street, and if those elected to serve have even a clue what course Wall Street
is on.
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