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conspiracy analyst
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 Posted: Sat Jan 26, 2008 1:10 am Post subject: 1929 Study & Today=Similarities and Differences |
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It would be appropriate to focus to a certain extent to past economic history to see what happened then in order to see if what is happening now is being repeated...
Timeline of 1929
http://www.martinfrost.ws/htmlfiles/aug2007/wallst_crash.html#Timeline
Interesting is the Pecora Commission into the causes of the 1929 Crash
http://en.wikipedia.org/wiki/Pecora_Commission
This commission gave rise to regulation of banks conduct
http://answers.yahoo.com/question/index?qid=20071202135341AA5QZis
A serious analysis on how these forces are being replayed under new conditions for today
http://inoodle.com/2007/12/bush-admin-wall-streets-deep-denial.html
| Quote: | Monday, December 24, 2007
Bush Admin & Wall Street's Deep Denial
I came upon the below article, published in early September, while researching the Pecora Commission. As a brief introduction to this commission, I shall include, immediately below before the aforementioned article, an excerpt from the Pecora Commission entry in Wikipedia:
The Pecora Commission is the name commonly used to describe the commission established on March 4, 1932 by the United States Senate Committee on Banking, Housing, and Urban Affairs to investigate the causes of the Wall Street Crash of 1929.
[...]
Following the Wall Street Crash, the U.S. economy had gone into a depression, and a large number of banks failed. The Pecora Commission initiated major reform of the American financial system. As Chief Counsel, Ferdinand Pecora personally examined many high-profile witnesses that included some of the nation's most influential bankers and stockbrokers. As the Commission's first witness, Richard Whitney, president of the New York Stock Exchange, declared that "The Exchange's refusal to pay heed to popular demand for reform was simply a manifestation of courage to do those things which are right, regardless of how unpopular they may be for the time being." Other important members of the Wall Street financial community to give testimony before the Commission included investment bankers Otto H. Kahn, Charles E. Mitchell, Thomas W. Lamont, and Albert H. Wiggin, plus celebrated commodity market speculators such as Arthur W. Cutten. Given wide media coverage, the testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry after he admitted under examination that he and many of his partners had not paid any income taxes in 1931 and 1932.
As reiterated by SEC Chairman Arthur Levitt during his 1995 testimony before the United States House of Representatives, the Pecora Commission uncovered a wide range of abusive practices on the part of banks and bank affiliates. These included a variety of conflicts of interest such as the underwriting of unsound securities in order to pay off bad bank loans as well as "pool operations" to support the price of bank stocks. The hearings galvanized broad public support for new securities laws. As a result of the Pecora Commission's findings, the United States Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934, instituting disclosure laws for corporations seeking public financing, and in 1935 formed the SEC as a means to enforce the new Acts.
In 1939 Ferdinand Pecora published his memoirs that recounted details of the investigations. Titled "Wall Street Under Oath", Pecora wrote: "Bitterly hostile was Wall Street to the enactment of the regulatory legislation." As to disclosure rules, he stated that "Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker's stoutest allies."
Need I say that this is all sounding remarkably similar to the present-day scenario whereby Wall Street bankers are bringing home huge year-end bonuses at the very same time that the overall economy is collapsing?
So, is the SEC protecting the interests of the American people? Or is it, like the EPA, standing as a firewall in protection of powerful financial interests?
Here's a little something that the above Wikipedia entry doesn't get into. When the SEC was founded in 1935, to enforce the Securities Act of 1933 and the Securities Exchange Act of 1934, who was found fit to become its inaugural chairman?
None other than Joseph P. Kennedy, appointed by Franklin D. Roosevelt in return for Kennedy's support in Roosevelt's successful 1932 presidential bid. Joseph Kennedy's Wall Street career is summarized within Wikipedia as follows:
In 1919, he joined the prominent stock brokerage firm of Hayden, Stone & Co. where he became an expert in dealing in the unregulated stock market of the day, engaging in tactics that would later be labeled insider trading and market manipulation. In 1923 he set up his own investment company and became a multi-millionaire during the bull market of the 1920s.
David Kennedy, author of Freedom From Fear, describes the Wall Street of the Kennedy era:
(It) was a strikingly information-starved environment. Many firms whose securities were publicly traded published no regular reports or issued reports whose data were so arbitrarily selected and capriciously audited as to be worse than useless. It was this circumstance that had conferred such awesome power on a handful of investment bankers like J.P. Morgan, because they commanded a virtual monopoly of the information necessary for making sound financial decisions. Especially in the secondary markets, where reliable information was all but impossible for the average investor to come by, opportunities abounded for insider manipulation and wildcat speculation.
Kennedy formed alliances with several other Irish-Catholic money men, including Charles E. Mitchell, Michael J. Meehan and Bernard Smith. He helped establish the Libby-Owens-Ford stock pool, an arrangement in which Kennedy and colleagues created an artificial scarcity of Libby-Owens-Ford stock to drive up the value of their own holdings in the stock. Using inside information, and the public's lack of knowledge, a pool operator would bribe journalists to present that information in the most advantageous manner. The stocks would then change in price up or down depending on the position favored by the pool.[citations needed]
Kennedy got out of the market in 1928, the year before the Crash, locking in multi-million dollar profits.
Well, well. So who better, really, to serve as the inaugural firewall between the American people and the business/finance elite? And should we be surprised, today, to find that the Wall Street fraudsters are at it again, making a fortune on the backs of the American people, with apparent impunity granted by the U.S. government?
The aforementioned article follows.
***
Bush officials' testimony shows they still haven't come to terms with what's happening in the credit markets, nor has Wall Street.
by Robert Kuttner | September 7, 2007
The American Prospect
Frank Talk. In 1933, the House Banking Committee began a remarkable series of hearings on the causes of the Great Crash. The investigations, which became known as the Pecora hearings after chief committee counsel Ferdinand Pecora, laid bare the conflicts of interest and insider scams that pumped up the stock market bubble of the late 1920s. The Pecora hearings also laid the groundwork for the great financial reforms of the New Deal, which in turn bequeathed two generations of prosperity, thanks to a regulatory system that invited economic dynamism with rules that prevented abuses.
History has now thrust Barney Frank into the role of the next Pecora. Rep. Frank (D-Mass.), a smart progressive, chairs the House Financial Services Committee, the current name for the Banking Committee. But judging by Wednesday’s kickoff hearing in a series of inquiries into the deepening financial mess, Rep. Frank faces a tougher challenge than Pecora did.
This is because the Bush administration and most on Wall Street are still in deep denial of what is occurring in credit markets. The administration testimony suggested that the deniers dearly want to believe that the meltdown in sub-prime mortgages is a one-off, that the economy dodged a bullet, and hence only the most modest government response is required.
This kind of denial has superficial appeal because, unlike in 1933 when Pecora began his work, we haven’t yet had a full-blown crash. But if the government’s only response is to wait for the Fed to bail things out and to do a little tweaking of abuses around the edges, that crash will come.
As Frank put it, “I am not pleased that so many of us were surprised at how the sub-prime crisis spilled over into broader financial markets. I don’t want us to be surprised again.”
“We have had a test case,” he observed, “and in the mortgage market, sensible regulation worked better than its absence.”
“The question before us,” he added speaking more broadly, “is whether there may be a systemic problem here. Has innovation so outstripped financial regulation that we need to catch up, without diminishing the advantages?”
Amen.
Fox, Chickens. Testifying for the administration, Treasury Undersecretary for Domestic Finance Robert K Steele assured the committee that “while certain sectors like housing are undergoing a transition, overall economic fundamentals remain solid.” This column will continue to track Hoover-like statements in coming days. As Frank acidly observed in his opening remarks, “We have tried to talk investors out of being nervous. I don’t think that works very well.”
Steel also told the committee that the President’s Working Group on Financial Markets, chaired by Treasury Secretary Hank Paulson was on the case. This is a real hoot, since connoisseurs of this crisis will recall that the committee was set up precisely to beat the drums for more deregulation. Paulson’s committee is about the last place in Washington to look for sensible policy. One of the few nice bi-products of this crisis is that you don’t hear very many people these days warning that regulation is killing capital markets.
Well, Actually … In fact, while the Financial Services Committee was holding its hearing, over at the House Ways and Means Committee, which is considering legislation to tax the windfall gains of hedge funds executives as ordinary income rather than capital gains, hedge fund lobbyists, such as Bruce Rosenblum of the Carlyle Group, were repeating stale warnings that fair taxation would drive capital investment offshore -- to say London where hedge funds are booming and are more tightly regulated than here. “Complete poppycock,” replied witness Leo Hindery, Jr., a managing partner at a private equity firm InterMedia (and an anomalous Wallstreeter who is raising money for John Edwards Business-Should-Not-Fear-Edwards Jan-08 .) Hindery added, “Congress, starting with this committee, needs to tax money-management income, what we call carried interest, as what it is, which is plain old ordinary income.”
Amen again. |
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conspiracy analyst
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Joined: 27 Sep 2005
Posts: 2279
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| Posted: Sat Jan 26, 2008 1:56 am Post subject: |
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Is it a case of Emperor Bush fiddled whilst Rome burnt...
Crisis what crisis says one banker to another whilst pocketing his bonus...
Wall Street gurus have awarded themselves 33billion bonuses while economy Crashes.
The Wall Street gurus have awarded themselves bonuses totaling 33 billions while economy Crashes.
January 18, 2008
The Wall Street gurus who presided over the subprime mortgage crisis currently shredding global sharemarkets have awarded themselves bonuses totalling $US33.2 billion ($38 billion).
In a concession to the crisis - which has forced America's largest banks to write off billions in bad investments and raise billions more to shore up their capital reserves - the bonuses were down nearly 5 per cent on the previous year.
The average bonus of $US180,420 ($206,088) in 2007 dipped 4.7 per cent from the previous year, New York state Comptroller Thomas DiNapoli said in a statement today.
The securities industry rewarded $US33.2 billion in bonuses to its New York City employees, two per cent less than the record $US33.9 billion ($38.7 billion) in 2006, he said.
The numbers are taken from the seven largest financial firms headquartered in New York City, which are tracked by the comptroller's office. The firms are Citigroup, Merrill Lynch, JPMorgan Chase, Goldman Sachs, Bear Stearns, Morgan Stanley and Lehman Brothers.
All except Goldman Sachs, which largely avoided the risky loans, have been battered by the financial crisis.
While the seven firms earned $US39 billion ($45 billion) in profits during the first half of 2007, a 41 per cent gain over the prior year, they lost $US28 billion ($32 billion) in the third and fourth financial quarters, DiNapoli said.
Total pretax profits for the seven firms totalled $US11 billion ($12.6 billion) in 2007, less than one-fifth of the $US60 billion ($68.5 billion) record set in 2006, the comptroller said.
Employee compensation, which includes bonuses, consumed 61 per cent of the firms' revenues in 2007, up from 45 per cent 2006. DiNapoli said this reflected the firms' efforts to keep high-performing employees.
Those working in mergers and acquisitions and in equities should be rewarded with bigger bonuses but employees in the fixed-income units that handle mortgages will be "dramatically lower", the comptroller said.
Compensation experts say those high-performing units will basically subsidise whatever bonuses are left to give to flagging parts of the banks' business. Because of the dismal performance of the Wall Street investment houses, Morgan Stanley chief executive John Mack and Bear Stearns chairman James Cayne gave up their huge annual bonuses.
Last year, they were paid about $US40 million ($45.7 million) in compensation.
http://business.smh.com.au/wall-st-...dmh=dm16.298151 |
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conspiracy analyst
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| Posted: Sat Jan 26, 2008 3:47 pm Post subject: |
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http://www.silverbearcafe.com/private/confiscation.html
Gold was nationalised in the USA in 1933 as a response to the Wall Street crash.
The US government wanting money to introduce the NEW DEAL was forced into this move.
Will the same happen again now gold is going through the roof as investors are dumping their dollars? |
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conspiracy analyst
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| Posted: Sat Jan 26, 2008 3:53 pm Post subject: |
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Prophetic?
| Quote: | Fiat Paper Money
by Rep. Ron Paul, MD
In an article entitled "Gold and Economic Freedom," Federal Reserve Chairman Alan Greenspan wrote that "The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom...The speculative imbalances had become overwhelming and unmanageable by the Fed... In the absence of the gold standard, there is no way to protect savings from confiscation through inflation." The irony is that Mr. Greenspan's words, written in 1966 to describe the era leading up to the Great Depression, could easily have been written in 2003 to describe the consequences of his own Fed policies during the 1990s.
Mr. Greenspan once understood that a fiat money system represents nothing more than a sinister and evil form of hidden taxation. When the government can print money at will, it's morally identical to the counterfeiter who illegally prints currency. Fiat money polices especially hurt savers and those on fixed incomes, who find the value of their dollars steadily eroded by the Fed's printing presses.
We need to understand why a fiat system is so popular with economists, the business community, bankers, and government officials. One explanation is that a fiat monetary system allows power and influence to fall into the hands of those who control the creation of new money, and to those who get to use the money or credit early in its circulation. The insidious and eventual cost falls on unidentified victims, who are usually oblivious to the cause of their plight.
Another explanation is that it's human nature to seek the comforts of wealth with the least amount of effort. This desire is quite positive when it inspires efficient work and innovation in a capitalist society. Productivity is improved and the standard of living goes up for everyone. But this human trait of seeking wealth and comfort with the least amount of effort is often abused. It leads some to believe that by certain monetary manipulations, wealth can be increased out of thin air.
Most Americans are oblivious to the entire issue of monetary policy. We all deal with the consequences of our fiat money system, however. Every dollar created dilutes the value of existing dollars in circulation. Those individuals who worked hard, paid their taxes, and saved some money for a rainy day are hit the hardest. Their dollars depreciate in value while earning interest that is kept artificially low by the Federal Reserve easy-credit policy. The poor and those dependent on fixed incomes can't keep up with the rising cost of living.
We do hear some minor criticism directed toward the Federal Reserve, but the validity of the fiat system is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic – or so they believe.
Fiat dollars allow us to live beyond our means, but only for so long. History shows that when the destruction of monetary value becomes rampant, nearly everyone suffers and the economic and political structure becomes unstable. Spendthrift politicians may love a system that generates more and more money for their special interest projects, but the rest of us have good reason to be concerned about our monetary system and the future value of our dollars.
September 12, 2003
Dr. Ron Paul is a Republican member of Congress from Texas.
Ron Paul Archives |
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conspiracy analyst
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| Posted: Sun Jan 27, 2008 11:43 pm Post subject: |
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It didn't work then will it work now?
The great fiscal stimulus package ... of 1929
By Michael Kitchen, MarketWatch
Last update: 12:01 a.m. EST Jan. 26, 2008
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NEW YORK (MarketWatch) -- Lately, whenever the market has a bad day, the reflex among financial-news editors is to compare our current situation with 1987 and wonder if a "Black Monday"-style crash is on the horizon.
But some observers draw a darker metaphor, noting that much of what we are seeing now also took place in 1929. As we know, that meltdown -- unlike the 1987 crash -- was not followed by a happy ending, but rather by a decade of poverty, shantytowns and sporadic famine.
Popular imagination has the Great Depression opening with a bang in October 1929. We forget that even by December of that year, the market had no idea what was really in store. After a period of wild, bipolar volatility, stocks had taken two big tumbles (a 12.8% drop on Oct. 28 and an 11.7% fall the next day) while the top bankers and "captains of industry" rushed to shore up the market. By November, the Dow had hit its low for the year at 198, down from the giddy September high of 381.
But, the financial pundits and government leaders of the day insisted, the economy's fundamentals were still strong. Mass unemployment was, some months after the crash, still just something that went on in Germany and Britain. America was strong and merely needed a push to keep the financial markets from harming the broader economy.
With that in mind, Herbert Hoover -- only nine months into his presidency -- assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package. The proposal called for $160 million in tax relief -- only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008. Read Time's original coverage of the plan.
Also on the table was an assurance from the Federal Reserve that it would provide cheaper credit. Granted, the Fed had much less power over the money supply in those days, mainly because the amount of liquidity it could create was limited by the supply of gold it held to back the dollar.
Of course, there were a litany of public-works projects, plans for new corporate investments, and even a promise by Henry Ford to raise wages at his auto plants.
None of this worked. What was first seen as speed bump to the expansion of American finance became something much larger. The Dow continued falling, hitting 157 in 1930, 73 in 1931 and finally a mere 41 points in 1932. It did not reach its 1929 high again until 1954, a generation later.
Certainly, our economy now has far more differences than similarities with the economy of 1929, and few expect a new depression for the decade ahead. But it's also worth remembering that the best laid plans of presidents, chief executives and senators can sometimes come to nothing. End of Story
Michael Kitchen is a copy editor for MarketWatch and is based in N |
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blackcat
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| Posted: Mon Jan 28, 2008 8:29 am Post subject: |
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http://www.pbs.org/wgbh/amex/crash/sfeature/sf_excerpts.html#top
The crash of 1929.
_________________
"The conflict between corporations and activists is that of narcolepsy versus remembrance. The corporations have money, power and influence. Our sole influence is public outrage. Extract from "Cloud Atlas (page 125) by David Mitchell. |
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