Business, Criminal State
A.I.G. Made Easy
March 25, 2009 by Jeff Gates · 6 Comments
Copyright Korea Times
Had insurance giant A.I.G. collapsed, losses from its failed insurance coverage would have rippled through banks and investment banks worldwide, destabilizing the world economy.
Yet A.I.G. set aside no reserves to cover the risk of default on those securities it collected premiums to insure. Why should it? Securities rating agencies ranked even the riskiest of those securities akin to U.S.-government bonds with virtually no chance of default.
A.I.G. professed to insure high-risk loans packaged and resold as low-risk securities to unwary pension funds. In a financial markets version of musical chairs, A.I.G. could afford to be the last one standing, confident they were too big to fail. Let’s keep it simple: imagine the casino skim taken to global scale as players extracted fees at each step along the way.
A.I.G.’s lack of financial reserves did not inhibit its financial products unit from charging handsome fees while its insurance unit pocketed vast premiums. A.I.G.’s rare triple-A rating lent the firm an image of strength and stability even as it “insured” the riskiest securities backed by the least secure of subprime mortgages.
A.I.G.’s financial “creativity” induced A.I.G. clients to believe their premiums would cover the risk of default. Heads A.I.G. wins. Tails and we’re told that taxpayers must pay. A precedent was set with the massive savings and loan fraud of the late-1980s when policy changes enabled a similar financial “pump-and-dump.” As real estate prices soared, cash was skimmed at the top of the market to acquire assets cheaply at the fire-sale bottom.
The origins of this fraud can be traced to a “Chicago” mindset that likens unfettered financial freedom to personal freedom. The public interest, we’re assured, is best served by allowing money to freely work its will worldwide. Fed Chairman Alan Greenspan reassured us that “financial creativity” would protect us from the very “irrational exuberance” that he enabled with a combination of easy money and free market ideology.
In a classic exercise in political distraction, the public is now incensed at a reported $165 million in incentive payments to the A.I.G. geniuses behind this financial creativity. In truth, their real bonus figure is closer to $450 million. Albeit outrageous, it totals less than one quarter of one percent of a taxpayer bailout for A.I.G. poised to top $200 billion.
Forced to disclose to which firms the first $85 billion in bailout funds were paid, A.I.G. conceded that 16 of the top 22 institutions were foreign-owned firms. Goldman Sachs, a key node in this transnational network of financial creativity, was paid $13 billon by A.I.G. That’s in addition to the $10 billion that Washington paid directly to Goldman last fall.
Obama adviser Larry Summers succeeded Goldman Sachs chair Robert Rubin as Treasury Secretary when key policies were changed that enabled this fraud. He also handpicked a Harvard advisory team who oversaw a similar fraud that financially pillaged the Russian economy. When Moscow hit the “reset” button in its shift from state to private ownership, a national scale fraud created an oligarchy that dominates the Russian economy.
As soon as Russia’s restructuring was complete, its beneficiaries cited sanctity of contract to protect the spoils of their massive fraud while a deceived Russian public was driven into poverty. There, a massive “loan for shares” fraud enabled financial sophisticates to emerge dominant. Here, a massive “funds for shares” program turned to hedge funds and private equity firms to rescue us from our Greenspan-enabled profligacy.
To facilitate an American-style “reset,” government debts will be secured by our full faith and credit to help financial sophisticates buy trashy debt securities from A.I.G.’s defrauded clients. That cost will reduce fiscal resources required to address the retirement needs of 78 million Baby Boomers whose pension funds were ravaged by this “Chicago” fraud.
As this cash-for-trash program proceeds, who will emerge as dominant owners of the nation’s distressed financial sector? Answer: the senior partners of hedge funds and private equity funds—who already dominate the Forbes 400 list of richest Americans.
As in Russia, debate is being framed around sanctity of contract to insulate from a deceived public a vast transfer of wealth into a few hands. Summers cited that sanctity to insist that A.I.G.’s financial products unit be allowed to keep their half-billion dollars in taxpayer-paid bonuses. Obama initially opposed the bonuses while an incensed House approved legislation imposing a 90% tax. Chicagoan Obama has since backed down. That tax could have set a precedent for a bilked public to recover other stolen wealth.
The real issues remain obscured in the outrage over executive pay while the entire economy is being “reset” in plain sight. The policy changes proposed by Summers & Co. will create a uniquely American-style oligarchy. As taxpayers are stuck with the mortgage, our creative financial sophisticates will get the house. Is this the future that Americans want?
Another intelligence “dot disconnect” may be in the works. While Secretary of Homeland Security Janet Napolitano cites our porous borders as the primary danger, intelligence agencies confirm that our weakened economy poses the top threat to national security.
How was U.S. security improved by enabling A.I.G. to make massive payments to foreign banks? How is our national interest served by taking us deeper into debt in order to bail out complicit bankers while creating a Russian-style oligarchy? If those simple questions were asked, the answers would lead us to those who orchestrated this greatest heist in history. And to those now enacting policies destined to make a bad situation worse.
March 24, 2009
For more background and a better understanding of the situation AT LARGE, please visit my website at http://www.criminalstate.com and have a quick peek at my book “Criminal State“.
You know, I have to tell you, I really enjoy this blog and the insight from everyone who participates. I find it to be refreshing and very informative. I wish there were more blogs like it. Anyway, I felt it was about time I posted, I?ve spent most of my time here just lurking and reading, but today for some reason I just felt compelled to say this.
[Reply]
Susan, thanks for adding a comment and I appreciate the kind words! I’m glad you’ve been wandering around the blog and the Criminal State website and I hope you find it to be beneficial and eye-opening. Please do pass this material along to your friends and I hope that you’ll keep coming back for more and keep posting comments, but more particularly YOUR insight into the situation!
[Reply]
Wall Street – Goldman Sachs – Washington
The UNBRIDLED GREED CONNECTION
The CEOs who boss the huge Wall Street firms invariably took huge risks with
other people’s money in order to get obscenely high bonuses after 2000. It was
their lobbying for de-regulation and then their over-leveraging that caused the
bubble and crash. Investment bankers like Goldman Sachs knew that they were
committing fraud when they sold packages of “liars’ loans” as triple “AAA” investments.
Not only did Goldman sell more of these bundles of “toxic assets” than anyone
else, they also bought more credit default swaps from AIG as insurance against
the mortgages and the banks who held them failing. Such large purchases of
insurance from AIG prove that Goldman knew their bundled mortgages were not
grade “AAA”. That should prove in a court of law that they were guilty of fraud and
misrepresentation. Why is their no criminal prosecution and no trial? Sources.
Besides, Goldman, many economists also saw this coming. Even TigerSoft
got the essentials exactly right. But among those who ran Wall Street and ran the
country, there was only a complete and reckless disregard about the consequences
of their greed, fraud and corruption as the housing boom developed and peaked.
Despite their responsibilities as leaders of finance and government, bank
CEOs like Paulson at Goldman (for example), US Treasury officials from Goldman,
Geithner at the NY Fed and key Congressmen, all let the boom get bigger and bigger,
pushing home prices higher and higher. Goldman Sachs’ CEO Paulson even
successfully lobbied the SEC to further reduce controls on investment bankers
in 2004 and 2005 while permiting them to use even more leverage. With no
real oversight, Bear Stearns, Lehman Brothers, Merrill Lynch, CitiGroup and
dozens of other banks became houses of cards to make their CEOs rich. Criminal
fraud of epic proportions as been committed, but Obama, who is in their pay,
says no crime has been committed without even conducting an investigation
and allows the CEOs at the banks getting billions in bailouts.
The eventual collapse was easily foreseen by cynical Wall Street insiders, like
ex-GS CEO Robert Rubin who sold out at the top. Rubin knew the risks. He and
Larry Summers (who got $7.8 Million from Wall Street and Goldman Sachs in 2008)
had long promoted the de-regulation of banks and the non-regulation of derivatives
like those that bankrupted AIG within the Clinton Administration. At CitiGroup,
it was Rubin after 2002, more than anyone else, who had urged that big bank to
maximize their use of leverage all the way up, making more and more ridiculous
loans to increase short-term profits to get higher and higher bonuses. These
corrupt anti-regulation ideologues just didn’t care about the consequences
of their policies. They completely disregarded the lessons of the 1920s-1930s.
How could such smart and learned men do this? Simply put, their loyalty had
been richly bought and paid for by Wall Street..
.
It is significant that Goldman Sachs avoided the worst of the 2008-2009 Crash.
In September 2007, Goldman issued a report predicting a 35% to 40% drop in housing
prices. Most of their profits after 2007 came from buying credit default swaps and
selling stocks short. To that end, because they understood the dynamics of the boom
they had helped create, they set up a huge $10 Billion short selling Hedge Fund
in December 2007. This was done at the perfect time. Goldman thus sold short
all the way down.
But that’s only a small part of the story. Goldman Sachs got a TARP- I taxpayer
bailout of $20 billion from their ex-CEO, Henry Paulson as Treasury Secretary.
And never ones to lose an opportunity to steal from the taxpayer, Goldman got
$13 billion more when the American taxpayer bailed out AIG. Goldman was apparently
owed that much by AIG. If the taxpayers had not bailed AIG out, Goldman would have
lost the money. To arrange this, a secret meeting took place in September 2008
between the current Goldman Sachs CEO, Lloyd Blankfein, and Henry Paulson,
Bush’s Treasury Secretary and the previous CEO of Goldman Sachs.
Investment bankers create nothing! But they are paid everything! Goldman
played the bubble perfectly. Why did they succeed, where others on Wall Street
failed? They controlled Washington. Their people ran the US Treasury. When
they needed more money, their friends in Washington arranged billions for them,
always at the taxpayers’ expense.
Washington has been the tool of Wall Street for years and years. But never
more clearly than now, and it is Goldman Sachs that is the epicenter of this
Greed Connection between Wall Street and Washington.
The first quarter of 2009 earnings reports for Wells Fargo, Goldman Sachs
and JP Morgan have now come out. They show that the biggest monopoly
US Banks are certainly making lots of profits from the bailout, but the amount of their
loans to individuals and real people are declining, not rising! Housing starts and
employment are not going to improve by making wealthy bankers even richer.
The stated purpose of Obama’s/Paulson’s TARPs and the central premise in their
simplistic view of big bankers as salvation is shown to be a nasty FRAUD for scaming
billions from taxpayers. Shame on you, Obama! And shame on you, Mr Bernanke! We
still cannot see how much of the $2 Trillion that you have loaned individual banks,
has gone to companies like Goldman Sachs and on what terms. What are you
hiding? Why?
Who Are These People?
With an arrogance found only among the super rich, these Goldman Sachs
executives have claimed that they are the “best and the brightest”. They work hard
and have earned every penny of their fabulous pay. To keep the most talented
loyal, Wall Street firms like Goldman always say that they must pay very high salaries
and bonuses, very often in the tens of millions of dollars.
What a crock! They pay them exceesively to buy loyalty, just as a crime boss would.
They wish to prevent dissent, to keep their frauds and deceptions private, to attract
the greediest who lack compuction and to perpetuate an aristocratic cult.
The truth is very different. Goldman Sachs executives are not so
smart. They cultivate contacts and insider knowledge. Most have
been shown to be cut-throat fraudsters, They are not complex. They
are not conflicted. They are simply massively arrogant, spoiled and
greedy. They are elitists with a gigantic sense of entitlement. They
expect others to clean up after them. Under Obama, they remain
unpunished white collar criminals. They have committed massive
economic crimes in bringing down the entire world economy to
the shame of all Americans. They now fully expect to go unpunished
and be fully bailed out. In this, they are as unworthy as any dull,
selfish, over-indulged child from rich parents. Until they are punished
and their power and wealth taken away, America’s claim to be
a Democracy with equal justice for all will sound very hollow to
those that know the truth.
When the public finds all this out, they will be mad as hell. And it will ALL come out.
Help spread the word. Now is the time to break up these monopoly banks that are
“too big to fail” and have a thorough investigation of their criminal fraud. Without
such a public investigation, nothing will have changed. Trust will not return and
America will be victimized by these same scam artists again and again. The US
is already in too much debt. Giving billions and trillions to the banksters who
caused this calamity is immoral and very, very dumb.
There’s a lot more on the website for tigersoft.com Spread the word.
Obama has no backbone and Goldman Sachs has no conscience.
[Reply]
Thank you for exposing the “People in between”/ the “lobby”/ the “network”/the “Zionist Power Configuration” (James Petras term)….”Guilt By Association” is the VERY WELCOME preeminent addition to the efforts of James Petras, Jeff Blankfort, Ilan Pappe, Allison Weir, Mersheimer/Walt, Joel Kovel and others who have braved speaking out about this formerly “taboo’ subject!
[Reply]
Many thanks for your kind comments. A key goal of the Criminal State website is to enable “the mark” to see how this trans-generational syndicate operates in plain sight and, thus far, with impunity to displace facts with what “the mark” can be deceived to believe. As people gain the tools to see for themselves the common source of this duplicity, this subject will no longer be considered taboo. Very much appreciate your input. Please urge your friends and colleagues to read Guilt By Association, the first release in the Criminal State series, where the transnational activities of the criminal enterprise known as A.I.G. are described in more detail. Sponsors are sought to ensure the book reaches the desk of lawmakers worldwide.
[Reply]