5 February 2010 By Ellen
Brown We are
witnessing an epic battle between two banking giants,
JPMorgan Chase (Paul Volcker) and Goldman Sachs
(Rubin/Geithner). The bodies left on the battleground
could include your pension fund and 401K.
The late
Libertarian economist Murray Rothbard wrote that U.S.
politics since 1900, when William Jennings Bryan
narrowly lost the presidency, has been a struggle
between two competing banking giants, the Morgans and
the Rockefellers. The parties would sometimes change
hands, but the puppeteers pulling the strings were
always one of these two big-money players. No popular
third party candidate had a real chance at winning,
because the bankers had the exclusive power to create
the national money supply and therefore held the
winning cards. But Goldman
Sachs has been caught in this blatant market
manipulation so often that the JPMorgan faction of the
banking empire has finally had enough. The voters too
have evidently had enough, as demonstrated in the
recent upset in Massachusetts that threw the late
Senator Ted Kennedy’s Democratic seat to a Republican.
That pivotal loss gave Paul Volcker, chairman of
President Obama’s newly formed Economic Recovery
Advisory Board, an opportunity to step up to the plate
with some proposals for serious banking reform. Unlike
the string of Treasury Secretaries who came to the
government through the revolving door of Goldman
Sachs, former Federal Reserve Chairman Volcker came up
through Chase Manhattan Bank, where he was vice
president before joining the Treasury. On January 27,
market commentator Bob Chapman wrote in his weekly
investment newsletter The International Forecaster: “A split has occurred between
the paper forces of Goldman Sachs and JP Morgan Chase.
Mr. Volcker represents Morgan interests. Both sides
are Illuminists, but the Morgan side is tired of
Goldman’s greed and arrogance. . . . Not that JP
Morgan Chase was blameless, they did their looting and
damage to the system as well, but not in the high
handed arrogant way the others did. The recall of
Volcker is an attempt to reverse the damage as much as
possible. That means the influence of Geithner,
Summers, Rubin, et al will be put on the back shelf at
least for now, as will be the Goldman influence. It
will be slowly and subtly phased out. . . . Washington
needs a new face on Wall Street, not that of a
criminal syndicate.” Goldman’s
crimes, says Chapman, were that it “got caught
stealing. First in naked shorts, then front-running
the market, both of which they are still doing, as the
SEC looks the other way, and then selling MBS-CDOs to
their best clients and simultaneously shorting them.”
Volcker’s
proposal would rein in these abuses, either by ending
the risky “proprietary trading” (trading for their own
accounts) engaged in by the too-big-to-fail banks, or
by forcing them to downsize by selling off those
portions of their businesses engaging in it. Until
recently, President Obama has declined to support
Volcker’s plan, but on January 21 he finally endorsed
it. The immediate reaction of the
market was to drop – and drop, day after day. At
least, that appeared to be the reaction of “the
market.” Financial analyst Max Keiser suggests a more
sinister possibility. Goldman, which has the power to
manipulate markets with its high-speed program trades,
may be engaging in a Mexican standoff. The veiled
threat is, “Back off on the banking reforms, or stand
by and watch us continue to crash your markets.” The
same manipulations were evident in the bank bailout
forced on Congress by Treasury Secretary Hank Paulson
in September 2008. “High frequency trading
accounts for 70% of trading on the New York Stock
Exchange. Ordinarily, a buyer and a seller show up on
the floor, and a specialist determines the price of a
trade that would satisfy buyer and seller, and that’s
the market price. If there are too many sellers and
not enough buyers, the specialist lowers the price.
High frequency trading as conducted by Goldman means
that before the specialist buys and sells and makes
that market, Goldman will electronically flood the
specialist with thousands and thousands of trades to
totally disrupt that process and essentially
commandeer that process, for the benefit of siphoning
off nickels and dimes for themselves. Not only are
they siphoning cash from the New York Stock Exchange
but they are also manipulating prices. What I see as a
possibility is that next week, if the bankers on Wall
Street decide they don’t want to be reformed in any
way, they simply set the high frequency trading
algorithm to sell, creating a huge negative bias for
the direction of stocks. And they’ll basically crash
the market, and it will be a standoff. The market was
down three days in a row, which it hasn’t been since
last summer. It’s a game of chicken, till Obama says,
‘Okay, maybe we need to rethink this.’” But the
President hasn’t knuckled under yet. In his State of
the Union address on January 27, he did not dwell long
on the issue of bank reform, but he held to his
position. He said: “We can't allow financial
institutions, including those that take your deposits,
to take risks that threaten the whole economy. The
House has already passed financial reform with many of
these changes. And the lobbyists are already trying to
kill it. Well, we cannot let them win this fight. And
if the bill that ends up on my desk does not meet the
test of real reform, I will send it back.” What this “real
reform” would look like was left to conjecture, but
Bob Chapman fills in some blanks and suggests what
might be needed for an effective overhaul: “The attempt will be to bring
the financial system back to brass tacks. . . . That
would include little or no MBS and CDOs, the
regulation of derivatives and hedge funds and the end
of massive market manipulation, both by Treasury, Fed
and Wall Street players. Congress has to end the
‘President’s Working Group on Financial Markets,’ or
at least limit its use to real emergencies. . . . The
Glass-Steagall Act should be reintroduced into the
system and lobbying and campaign contributions should
end. . . . No more politics in lending and banks
should be limited to a lending ratio of 10 to 1. . . .
It is bad enough they have the leverage that they
have. State banks such as North Dakota’s are a better
idea.” On January 28,
the predictable reaction of “the market” was to fall
for the seventh straight day. The battle of the Titans
was on. Ellen Brown developed her research skills as an
attorney practicing civil litigation in Los Angeles.
In Web of Debt, her latest book, she turns those
skills to an analysis of the Federal Reserve and “the
money trust.” She shows how this private cartel has
usurped the power to create money from the people
themselves, and how we the people can get it back. Her
eleven books include Forbidden Medicine, Nature’s
Pharmacy (co-authored with Dr. Lynne Walker), and The
Key to Ultimate Health (co-authored with Dr. Richard
Hansen). Her websites are
www.webofdebt.com,
www.ellenbrown.com,
and
www.public-banking.com. Comments 💬 التعليقات |