When did the financial crisis really start?

Check out the full set of graphs at Daily Kos: State of the Nation.

Global plan for recovery and reform

Read Global plan for recovery and reform. Excerpt:

By embracing the “global plan for recovery and reform,” which is how it was officially described, Obama explicitly endorsed International Monetary Fund (IMF) surveillance of the U.S. economy, creation of a global “Financial Stability Board,” the expanded use of a new global currency called Special Drawing Rights, a new global warming treaty, and costly fulfillment of the United Nations Millennium Development Goals (MDGs). This is in addition to the explicit and reported commitment of over $1 trillion in additional taxpayer money to the IMF and the World Bank. ...

The document includes the statement that “we reaffirm our historic commitment to meeting the Millennium Development Goals…” This is, in fact, a disguised attempt to make then-Senator Obama’s Global Poverty Act the law of the land through executive action. This measure alone has been estimated to cost $845 billion and it was never passed by Congress because of public opposition.

“We will support, now and in the future, to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy,” the document states. There is no exception for the U.S. Hence, the IMF will now be in a position to officially monitor and pass judgment on U.S. economic policies. We have become like any other second- or third-rate power in need of global oversight and supervision.

The proposed “new Financial Stability Board (FSB)” will have a “strengthened mandate” and work with the IMF to “reshape our regulatory systems.” Among other things, its mission is to “assess vulnerabilities affecting the financial system, identify and oversee action needed to address them,” “promote co-ordination and information exchange among authorities responsible for financial stability,” and “monitor and advise on market developments and their implications for regulatory policy.”

The Financial Stability Board is the new name for a more powerful and expanded Financial Stability Forum, a body originally designed to “promote international financial stability through information exchange and international co-operation in financial supervision and surveillance.” Members of the group include the central banks of various nations, international financial institutions, and supervisors in important financial centers.

FED Increases Bank Reserves by 1 Trillion

"There is no more surer, more subtler means of over turning the existing basis of society than to debauch the currency. The process (of inflating) engages all of the hidden forces of economics on the side of destruction and does it in a manner that not one man in a million can diagnose it" -- John Maynard Keynes

Jon Stewart discovers Goldman

The Daily Show With Jon Stewart	M - Th 11p / 10c
Clusterfu#@k to the Poor House - Goldman Sachs' Connections
thedailyshow.com
Daily Show Full Episodes Economic Crisis Political Humor

More at Goldman Sachs 666 blog.

A Bigger, Bolder Role Is Imagined For the IMF

A Bigger, Bolder Role Is Imagined For the IMF
Changes Suggest Shift in How Global Economy Is Run
By Anthony Faiola, Washington Post Staff Writer

Partial quote:
"The IMF is changing, and with it, there will be a sea change in the way the world economy is run," said C. Fred Bergsten, director of the Peterson Institute for International Economics. "Their role will dramatically shift. You're talking about monitoring fiscal stimulus, moving toward tighter regulations for financial institutions. You're talking about global economic management in a way we have never seen."

The Big Lie - Rob Kirby

Market Observation - Rob Kirby 04.20.2009 Partial quote:
The U.S. Treasury released the Treasury International Capital (TIC) report for February 2009. It shows another outflow of capital. “Monthly net TIC flows were negative $97.0 billion. Of this, net foreign private flows were negative $106.3 billion, and net foreign official flows were positive $9.3 billion.” This is a huge reversal. That is almost a quarter of a trillion dollars in just two months. Foreigners are not bailing out the Treasury any longer. They are pulling out. They are net sellers. This means that domestic buyers must be found — not just for the gigantic wave of debt already on the books but also for the foreigners who are saying sayonara. The FED has not budgeted for this. It has pretended that the much-heralded glut of international savings would continue. It’s over. It’s not just over; it’s imploding. We are now seeing a glut of selling.

Goodbye recovery, or, Goodbye dollar.

Visual guide to where you tax dollars go

Visual guide to where you tax dollars go

Click here.

George Soros calls for a World Currency to replace the Dollar

Danger: SEC does not enforce the law

I’ve commented before on how the Securities & Exchange Commission under Christopher Cox has looked the other way like a crooked cop while certain well-connected market makers robbed us of our 401k investments through counterfeit stock electronically injected by naked short selling. So it was with great interest I tuned in to watch the new SEC leader, Linda Thomsen, hold a public forum on proposals for new short selling rules. It was sad to see that the meeting turned into just talk, talk, talk, and no action for many months at best. When will the SEC start to do their job an arrest the parties that are failing to deliver?!

Far from just being inept, it appears the new SEC leadership is implicated in the failures to enforce justice under the old SEC. For example, watch Linda in action:

Full story read: Deep Capture, April 13, 2009.

We need more stimulus, not more bailout | Salon

We need more stimulus, not more bailout | Salon
To jump-start the economy, we need to spur consumer demand. We can't do that without additional stimulus.
By Robert Reich

Geithner believes the only way to rescue the economy is to get the big banks to lend money again. But he’s dead wrong. Most consumers cannot and do not want to borrow lots more money. They’re still carrying too much debt as it is. Even if they refinance their homes -- courtesy of the Fed flooding the market with so much money that mortgage rates are dropping -- consumers are still not going to borrow more. And until there’s enough demand in the system, businesses aren’t going to borrow much more to invest in new plant or machinery, either.

That’s the big issue -- the continued lack of enough demand in the economy. The current stimulus package is proving way too small relative to the shortfall between what consumers and businesses are buying and what the economy could produce at full capacity.

Worse yet, the states are pulling in the opposite direction. States cannot run deficits, which means that as their revenues drop in this downturn they’re cutting vital services and raising taxes to the tune of $350 billion over this year and next. This fiscal drag is wiping out about half of the current federal stimulus.

If Geithner gets Congress to give him more bailout money, Congress won’t be in any mood to do what it really needs to do -- which is to enlarge the stimulus package. Voters are already worried about too much government spending. At most, the administration is going to get only one more bite at the congressional apple. Make that more stimulus rather than more bailout.

Dilbert

From Dilbert.com on April 12, 2009

George Soros on CDS Need Regulation

George Soros Says Credit Default Swaps Need Much Stricter Regulation - WSJ.com
By GEORGE SOROS
In all the uproar over AIG, the most important lesson has been ignored. AIG failed because it sold large amounts of credit default swaps (CDS) without properly offsetting or covering their positions. What we must take away from this is that CDS are toxic instruments whose use ought to be strictly regulated: Only those who own the underlying bonds ought to be allowed to buy them. ...

Naked Short Sales Hint Fraud in Bringing Down Lehman

Naked Short Sales Hint Fraud in Bringing Down Lehman - Bloomberg.com
By Gary Matsumoto

March 19 (Bloomberg) -- The biggest bankruptcy in history might have been avoided if Wall Street had been prevented from practicing one of its darkest arts.

As Lehman Brothers Holdings Inc. struggled to survive last year, as many as 32.8 million shares in the company were sold and not delivered to buyers on time as of Sept. 11, according to data compiled by the Securities and Exchange Commission and Bloomberg. That was a more than 57-fold increase over the prior year’s peak of 567,518 failed trades on July 30.

The SEC has linked such so-called fails-to-deliver to naked short selling, a strategy that can be used to manipulate markets. A fail-to-deliver is a trade that doesn’t settle within three days.

“We had another word for this in Brooklyn,” said Harvey Pitt, a former SEC chairman. “The word was ‘fraud.’”

While the commission’s Enforcement Complaint Center received about 5,000 complaints about naked short-selling from January 2007 to June 2008, none led to enforcement actions, according to a report filed yesterday by David Kotz, the agency’s inspector general.

...

Airport Runway

On Sept. 17, two days after Lehman Brothers filed for Chapter 11 bankruptcy, the number of failed trades climbed to 49.7 million, 23 percent of overall volume in the stock.

The next day, the SEC announced its ban on shorting financial companies in 2008. The number of protected stocks ultimately grew to about 1,000. On Sept. 19, the commission announced “a sweeping expansion” of its investigation into possible market manipulation.

The ban, which lasted through Oct. 17, didn’t eliminate shorting, according to data from the SEC, the NYSE Arca exchange and Bloomberg. Throughout the period, short sales averaged 24.7 percent of the overall trading in Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. on NYSE Arca. In 2008, short sales averaged 37.5 percent of the overall trading on the exchange in the three companies.

To date, the commission hasn’t announced any findings of its investigation. Pollack, the former SEC regulator, wonders why. “This isn’t a trail of breadcrumbs; this audit trail is lit up like an airport runway,” he said. “You can see it a mile off. Subpoena e-mails. Find out who spread false rumors and also shorted the stock and you’ve got your manipulators.”

Interview with Max Keiser on financial crisis

Max Keiser's site. Wikipedia.

Gradual Evolution to a Global Currency

Get ready for the phoenix. The Economist: Vol. 306: January 9, 1988: pages 9-10

“THIRTY years from now, Americans, Japanese, Europeans, and people in many other rich countries and some relatively poor ones will probably be paying for their shopping with the same currency. Prices will be quoted not in dollars, yen or D-marks but in, let's say, the phoenix. ... a few more stockmarket crashes and probably a slump or two will be needed before politicians are willing to face squarely up to that choice. ... The world phoenix supply would be fixed by a new central bank, descended perhaps from the IMF. ... The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today. In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power. ... Pencil in the phoenix for around 2018, and welcome it when it comes.”

On March 25, Timothy Geithner, Treasury Secretary and former President of the New York Federal Reserve, spoke at the Council on Foreign Relations, when asked a question about his thoughts on the Chinese proposal for the global reserve currency, Geithner replied that,

“I haven't read the governor's proposal. He's a remarkably -- a very thoughtful, very careful, distinguished central banker. Generally find him sensible on every issue. But as I understand his proposal, it's a proposal designed to increase the use of the IMF's special drawing rights. And we're actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, than -- rather than -- rather than moving us to global monetary union.”

A recent article in the Economic Times stated that,

“The Group of 20 leaders yesterday gave approval for the agency to raise $250 billion by issuing Special Drawing Rights, or SDRs, the artificial currency that the IMF uses to settle accounts among its member nations. It also agreed to put another $500 billion into the IMF’s war chest.”

Read Full Article.

Glenn Greenwald on Wall Street's ownership of government

Glenn Greenwald - Saturday April 4, 2009 08:35 EDT
Read Larry Summers, Tim Geithner and Wall Street's ownership of government - Salon.com. Snip:

Just think about how this works. People like Rubin, Summers and Gensler shuffle back and forth from the public to the private sector and back again, repeatedly switching places with their GOP counterparts in this endless public/private sector looting. When in government, they ensure that the laws and regulations are written to redound directly to the benefit of a handful of Wall St. firms, literally abolishing all safeguards and allowing them to pillage and steal. Then, when out of government, they return to those very firms and collect millions upon millions of dollars, profits made possible by the laws and regulations they implemented when in government. Then, when their party returns to power, they return back to government, where they continue to use their influence to ensure that the oligarchical circle that rewards them so massively is protected and advanced. This corruption is so tawdry and transparent -- and it has fueled and continues to fuel a fraud so enormous and destructive as to be unprecedented in both size and audacity -- that it is mystifying that it is not provoking more mass public rage.

Bill Moyers Journal on Banking Fraud

The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.
Watch the Bill Moyers Video with William Black.
How the FBI Blew It and Why There's No 'Perp Walks'.
Geithner's Stress Test "A Complete Sham".

Tax Havens: The Hidden Hand in the Financial Crisis

Transparency Key to Effective Reform of Global Financial System in G-20 Process

PRNewswire-USNewswire / Transparency Key to Effective Reform of Global Financial System in G-20 Process

"There is a shadow financial system comprised of tax havens, secrecy jurisdictions, disguised corporations and anonymous trusts which facilitates the movement of corrupt, criminal, and commercially tax-evading money across borders and around the world," says Raymond Baker, director of Global Financial Integrity (GFI). "This shadow financial system is at the heart of the current global economic crisis. Secrecy prevents accurate appraisal of the depths of the subprime mortgage collapse and other collateralized debt obligations, credit default swaps, derivatives contracts, and more. Lending has nearly collapsed since financial institutions are unable to discern the quality of assets of those needing funds."

G-20 Meeting

I'm having a very good crisis

'I'm having a very good crisis,' says Soros - Mail Online

While the financial crisis continued to deepen across the globe, the 78-year-old still managed to make $1.1 billion last year.
'It is, in a way, the culminating point of my life’s work,' he told national newspaper The Australian.

America’s Oligarchs and the Financial Crisis

The Quiet Coup - The Atlantic (May 2009):
"The Quiet Coup: America’s Oligarchs and the Financial Crisis"

Here is an article from the chief economist of the IMF in 2007 and 2008...

The financial services industry by using a confluence of campaign finance, personal connections, and ideology there flowed, in just the past decade, a river of deregulatory policies that is, in hindsight, astonishing:
• insistence on free movement of capital across borders;
• the repeal of Depression-era regulations separating commercial and investment banking;
• a congressional ban on the regulation of credit-default swaps;
• major increases in the amount of leverage allowed to investment banks;
• a light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement;
• an international agreement to allow banks to measure their own riskiness;
• and an intentional failure to update regulations so as to keep up with the tremendous pace of financial innovation.