Category Archives: Bailouts & Banks
Banks took extraordinary risk in the early 21 Century and demanded tax payer funding to continue operations, some governments foolishly agreed and the taxpayers became angry. This act of pandering to greed and stupidity of the financial elites was one of the driving forces behind the occupy movement. though some people seemed to forget this.
some excerpts from the story
Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight of Jews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”
Ross’s statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.
“I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.”
The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.
The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.”
- Adam Smith
The somewhat autobiographical story of Jordan Belfort and Stratton Oakmont.
The story of Jordan Belfort is closely but not exactly told in ‘wolf of wall street’. Some names and facts have been changed to protect the less guilty. In the film he alludes to what Lehman brothers and other now infamous investment/banking houses were doing with derivatives ten years before it became topical (and disastrous).
Having just Acquired his stock brokers license Jordan Belfort begins working at L.F. Rothschild as a stockbroker on wall street. Two problems: 1) This Rothschild is not related to the ultra moneyed European Rothschilds, and 2) the 1987 stock market crash occurred on his first day and he looses his job with he collapse of the company he worked for.
Jordan then stumbles into penny stocks and realizes with his license to sell blue chip stocks he can then induce the much bigger market into far riskier and stock broker lucrative penny stocks. But along the way Jordan attracts a band of merciless hustlers that become his boiler room. The film Boiler room is also about this con game. If this wasn’t enough there we the drugs, The drugs were cocaine, Quaaludes and almost anything they could get their hands on, prescription or not.
A bunch of small time drug dealers/dabblers hustle their way to the top, their modus operandi is essentially no different to the larger game. Agressive con men fueled by drugs and excess in a massive ponzi scheme, what could go wrong? The creation of an artificial empire of hookers, drugs and a charismatic cult leader imploring and mentoring his followers to rake in more mammon (money). Some of the editing in the movie even shows blatant continuity errors when Jordan is wasted on drugs. The rolling down the country club stairs to get to his car is an example, though the car damage is more obvious.
Its a fugazi
The money that goes into the market stays in the market. The pyramid is not build if people start removing the blocks. Just like removing a block from the corner of a pyramids base can collapse the whole pyramid. So if you are skilled enough to get people to invest in the first place, be skilled enough to make them keep their money in the game. All the money is fake once it enters the system, destined to never be seen again by investors.
Think about it, if the broker takes a 50% commission on the sale of $1000 of stocks the clients investment has lost 50% on day 1. The stock has to reach to more than $2000 just for the client to break even. Where exactly does the money to pay investors come from? from the fugazi vortex? No, any possible gains are then plowed back into the vortex of imaginary money. So for a penny stock investor to make money their stock price must reach more than 201% of their purchase price. While some penny stocks can do this they are rare, especially when you consider that most of the stock were subject to price manipulation in a classic pump and dump system.
A fire in the side show can spread to the big-top.
Regulators really don’t care for the victims of these frauds, they just want to make sure a few operators don’t threaten the faith in larger ponzi game (con) of money printing and taxation. Its salient point that Belfort served 22 months of a 4 year sentence for frauds totaling 110 million dollars. A small penalty for stealing the life savings of thousands of people He was forced to pay back about 10 million which mostly came from the sale of his house leaving the question open, where did the other 100 million go? Remember the guy was using a variety of money laundering systems.
22 months imprisoned for stealing 110 Million dollars from his clients, that equates one month in prison for stealing 5 million dollars.
Would you be willing to steal 5 million dollars if you punishment was only 1 month in prison and there is a good chance you were able to hide a great deal of the money and have it waiting for you secretly once you were freed?
The state is less concerned when you steal from the citizenry than when you steal from the state.
The state also punishes small thefts so much more harshly than large thefts. Recall the scene where the butler has an orgy at Jordan’s apartment and his money and jewelery is stolen. Oh the horror that some one might steal from him in a day, the amount that he might steal in a minute.
So what happens when everyone decides to go home?
The financial circus was never mean to close, it was a designed as a 24/7 365 day operation with a sucker born every minute. Unfortunately the circus became so big that it altered the town. The wars it funded eventually created a population bubble. Soon the bubble in population had fewer children than before and so did those children. Soon there were less suckers born and more wise to the game and lived long enough to collect on the bets. It was known in financial circles that 2007-2009 would be a very difficult time for markets, as the baby boomers would begin to retire and their vast proportion of the worlds wealth would begin exiting the market.
The sub prime bubble just made this problem even worse and more sudden, the market was facing the perfect storm of peak oil and peak boomer investment both oil and boomers were about to go into terminal decline.
Its is not that Stratton Oakmont was an anomaly in the system, its just that they exposed what the financial system is: a giant Ponzi scheme run by arrogant delusional narcissists addicted to excess and hedonism.
He was not the first Ponzi operator and he wont be the last, Bernie Madoff proved that, Madoff was just more sophisticated and low key in his approach.
But the biggest Ponzi will be implode soon, fiat currency itself.
So where is he now? Jordan Belfort currently is on the sales and motivation speaker circuit and still presumably owes tens of millions of dollars to his former investors.
The body count:
Jan. 26, 2014
William Broeksmit, 58.
retired Deutsche Bank
Found hanging at home
Jan. 28, 2014
Gabriel Magee, 39.
JP Morgan’s European headquarters in London.
Reportedly leaped to his death from the 33rd story of his workplace
Jan. 29, 2014
Mike Dueker, 50.
Chief Economist at Russell Investments
Jumped over a four-foot fence and fallen some 40-to-50 feet down an embankment?
Feb. 3, 2014
Ryan Crane, 37.
JP Morgan trading exec.
Found dead at home poisoning suspected.
Feb. 4, 2014
Richard Talley, 57.
Former investment banker at Drexel Burnham Lambert and founder of Centennial.
Found is his garage at home with self inflicted nail gun wounds.
Do you believe in coincidences?
In a strange twist Liberal MP Sharman Stone has accused the government of lying and of “blackening the name of SPC workers”. Tony Abbott, of course, laid the blame for SPC’s woes on the unions, greedy workers and their over-the top entitlements. But when you analyze the details, the accusations turn out to be completely untrue.
(See article in the age)
Only $116,400 of allowances were paid to workers in 2013, which accounts for 0.1 % of the total costs of goods. In addition, the average worker at SPC receives a yearly pay well under the national average for manufacturing.
Business Spectator’s Rob Burgess – one of the few commentators to correctly diagnose this issue – has today raised similar concerns:
” SPCA workers earning around $50,000 a year are being used as cannon fodder…
What is at risk now is what should be a large growth industry – innovative packaged fruit products with strong export outlooks. The industry around Shepparton looks likely to be shut down to allow the Abbott government to present a united front against the union moment…
While this decision was justified in terms of SPCA’s ‘excessive’ enterprise bargaining arrangements, the company’s workers are already receiving pay well below the average manufacturing wage ($67,000), and far below general full-time weekly earnings of $74,000…
The wages issue is a smoke-screen. ‘ (source: macrobusiness.com.au “The symbolic slaughter of SPC)
Instead, what is really to blame for Australia’s manufacturing woes are the high dollar and cheap imports. In the past, when Australia was a much smaller place, local manufacturing performed well, because it had no overseas competitors. Now, when demand is much higher than in the past, Tony Abbott clearly wants people to receive third world wages, so shareholders and CEO’s can line their pockets. Clearly there is something wrong with this picture.
This does not necessarily mean the government should pay for a bailout . Apart from the fact that Coca Cola does have enough money to bail out SPC itself, this would only be a band-aid solution, as company after company will fold under the current market conditions.
On the face of it there are only two solutions: create import tariffs (not likely to happen )or turn SPC into a worker’s co-op, or face facts that Australia will cease to be a manufacturing country .
The truth of the matter is, Australia’s manufacturing crisis has been artificially created by the intentional decades long mismanagement of the government corporation , which is in turn fuelled by the profit driven greed of the global 1% crime cartel. Time for people to wake up : Our politicians do not really want to fix the situation, they are in it to line their own pockets and those of their corporate mafia bosses. It’s always refreshing when one of them stands up and calls the current system what it is : fraudulent, plain and simple.
HSBC get a slap on the wrist for money laundering. Once again proof that there is a different set of rules for massive corporation than there is for everybody else.
Too big to fail, too big to jail
English with Greek subtitles
Nigel Farage giving the EU parliament a bit of a reality check.
But why so many empty seats?
German and English with English subtitles
As usual most politicians are just parasites having a good bludge/rort at the expense of the taxpayer.
Art wank beret is now on!
This movie might otherwise be a typical forgettable Hollywood blockbuster, Guy gets rich, moves to the big city, gets the girl, creates a Bonnie and Clyde style crime spree in order to change the world.
However, in this movie they stole a premise that had been in many previous works, the idea that time was money and without stored time credits you simply timed out and died.
So in terms of illustrating concepts of the way fiat currency (and who controls it) intersects with and manipulates society, this film is quite a refreshing surprise.
I was wondering why i hadn’t seen this film or been told about it, then i discovered, it was released just a few weeks after occupy went world wide and so many of us were distracted with that.
As mentioned the multiple prior competing claims to the film concept “time is money, personal life clocks, timekeepers (time police)…” all fell on deaf ears ultimately. The cognitive dissonance of making a movie about central control of livelihood and the corruption and unfairness of it all, and still refusing to offer credit or homage to people who had the idea first and would otherwise be entitled to intellectual property rights from this profit making, though averagely received film. And they will scream blue murder if some abuses their intellectual property right to the film.
Having been provocative enough, I have only linked the trailer to the film, I’m sure if you are interested you will find one of many ways to enjoy it’s in its entirely.
Perhaps even look into one of the many prior works, left unacknowledged.
Since the movie is about alternative measures of value, I will introduce a new rating system for movie, smokes.
Surprised? You shouldn’t be cigarettes are currency in many places.
Rating: 2 smokes.
Art wank beret is now off.
*Contains some offensive language.
We would hope that you have all seen this, some of you will be saying ” already have seen this” , good, what are you doing about it then?
This video was made many years ago featuring a man who had been saying these things for years, is the penny beginning to drop for you all?