Stumbling Bank Reform or Corporate Governance?

If you step back and look at our situation from a longer historical perspective, it is obvious that we have fundamental flaws in the governing of nations around the world. The “shadow banking” world that is unfathomable to both the common folk and political “leaders” has now achieved what they always wanted — a shadow government.

The truth behind Wall Street maneuvers is on these pages, on main stream media and in hundreds of blogs all over the world. Starting in 1983, at a level of zero, Wall Street created at least $700 trillion in “shadow” currency that has world economists and political leaders pooping in their pants. In 1983 we had the equivalent of $50 trillion in world currency that was issued and regulated by governments of the world. Now we have about the same amount of government currency dwarfed by proprietary currency issued by Wall Street.

These shadow bankers control 90% of all “currency” in the world. Blankfein, Dimon and the rest of them think they deserve a bonus because they literally took control of the world — and there is nobody to stop them because nobody in power understands the logistics and even those who have a clue lack the political will or power to do anything about it.

Their weapon of choice was generically speaking, derivatives. But derivatives existed long before 1983. It was a classic case of using an existing tool, making it so complicated that nobody could audit it, and then declaring its value and use from the private sector with the government looking on in consternation because neither the regulators nor the legislators had a clue about what was happening. The same holds true in the judiciary where only a handful of Judges are beginning to understand the fake premises upon which these schemes were hatched.

Wall Street, now holding the purse strings of the world (even China) is calling the shots and they have the simple goals of money and power. They have it but they don’t have a clue how to govern. Their only political agenda is to maintain and build their own wealth and power, disregarding loyalty to any national boundaries.

The private sources of finance, liquidity and money have often enjoyed positions of great power. The difference now is that it is virtually complete — except for one thing that they and hundreds of heads of state before them fail to realize in their hubris — it only works as long as people let it work. Ultimately, as Jefferson penned it in the Declaration of Independence, government depends entirely upon the consent of the governed. And eventually,  heads roll when the people have had enough.

People submit themselves to governance under the theory that the governors they elect or allow to “rule” them will act within some bounds of decency as defined by the moment. Now people realize that their rulers are “undisclosed principals” but the identity of many of the shadow rulers is apparent to many. The people are far ahead of both the politically elected or anointed leaders and far ahead of the shadow bankers who rule from board rooms.

People will often endure hardship long after the breaking point just to maintain their own little status quo and to avoid living a society in chaos. Not forever, though. My observation is that everything is going to get a lot worse before it gets better. The “bankrupt” nations endangering the viability of the Euro got there by the same twisted manipulations as we did.

Somewhere along the line, the chains will break and it won’t be pretty. In order for people to turn the government upside down in order to make it right side up, they must be very angry. Angry people tend to do things to excess. Excess and at least temporary anarchy leave us with chaos where our life-long assumptions and security are terminated like a light switch being turned off.

I don’t know if the judiciary in this and other countries will have the fortitude, power or will to maintain the status of a nation of laws instead of men. I hope so. We are all depending upon the Judges and Juries of our system to set things right. We are all hoping that the anger gets channeled through the system instead of against it. But current scenarios are playing out the other way.

15 Responses

  1. we need a petition under “FOIA” to force the release of the aig bailout docs that have been sealed [imo to hide the collusion of the players].
    The epic proportions of “goldman suks” market manipulation is a kin to “crimes against humanity”… i.e. “gods work”

  2. Two points that jump out at me from this NY Times article on Goldman / AIG:

    From page 3:
    “In many of these deals, Goldman was trading for other parties and taking a fee. As the mortgage market declined, Goldman paid some of these parties while waiting for A.I.G. to meet its demands, the Goldman spokesman said. But one reason those parties were owed money on the deals was that Goldman had marked down the securities.”

    (Sooo… what entities or banks were the undisclosed “parties” for whom Goldman was trading? Was this yet another “backdoor bailout” of banks that were Goldman’s trading partners, two levels removed from AIG?)

    From page 4:

    “In addition to offering to cancel its own contracts, Goldman offered to buy all of the insurance A.I.G. had written for several other banks at severely distressed prices, according to three people briefed on the discussions.”

    (YET, the Fed later paid out 100 cents on the dollar for these during the bailout of AIG, something Tim Geitner said had to be done.)

  3. Strike that – make it “shadow government” at 85 Broad Street, NYC – as well as 30 Hudson Street, Jersey City, NJ.

  4. For a glimpse into the workings of the “shadow government” at 100 Broad Street, NYC, see article “Testy Conflict With Goldman Helped Push A.I.G. to Edge” in today’s NY Times by Gretchen Morgenson and Louise Story at link:

  5. Best article on the ‘mess” I have read anywhere.

  6. Bravo!! Best post yet.

  7. Great article. I am truely confused between fractional Banking and the use of direvatives and how they are used in a usual mortgage closing. Baby steps please!
    Stan Putra
    Racine Wi
    Bandera Beach
    Costa Rica
    the front view of my house.

  8. As Ellen Brown and others have pointed out, it
    is the interest on new money that is the problem, not
    the new money itself.
    True wealth is the sum total of all the goods and services the economy has to offer. Money is simply
    a “yard stick” for measuring the value of this wealth
    so that “barter”is facilitated. Banks are basicly barter
    institutions with a license to “monetize” real estate
    values by crediting the mortgagors account for about
    80% of the true value of his/her land. This allows the
    money supply to expand and contract depending on
    supply and demand. In an ideal world, where all parties are honest, this system would work well.
    Unfortunately, human nature being what it is, corruption and greed creep into the equation which
    requires some sort of policing mechanism to keep
    all parties honest. This is where a government owned
    Central Bank comes in, controlled and monitored by
    Congress. Of course, you also need honest Congress
    people, which means getting rid of the present ones
    and starting over again, ie a Federalist Solution.
    When the economy is good, the government should
    be running surpluses, which it would use to pay down
    previous deficits. When the economy is slow, deficits
    would be covered by interest free US Notes put into
    circulation, which would be removed by taxation as the
    economy improves. Thus the Central Bank would expand credit when the economy is slow, and contract it when things are humming along nicely.
    All this without any interest to parasites who in the
    past had a license to create credit out of nothing and charge interest on it.

  9. zurenarrh,

    It might have started earlier than that. Excerpts from an article well researched and written.
    Just 10 years after the American Revolution ended, the revolutionary idea that the people are individual sovereigns was supported by the Supreme Court of the United States. In A.D. 1793, in the case of Chisholm v Georgia, the Supremes declared that the American people were “sovereigns without subjects.” That principle is the essence of the American Revolution and the cornerstone of American Liberty. Everything great that this country ever achieved emanated from that principle.

    However, in A.D. 1890, Hans v. Louisiana, 134 U.S. 1, another Supreme Court effectively reversed the Chisholm case and thereby stripped the American people of their God-given, unalienable Rights.

    We now know: 1) the system did remove our God-given, unalienable Rights; 2) when they did it; and 3) how they did it. This knowledge hasn’t been hidden, but its been obscured so as to prevent our understanding.
    Download the commented PDF, it is well worth the read.

  10. This is such a great article. My understanding is that this banker takeover started 70 years earlier than Neil suggests–in 1913, when the Federal Reserve was born. Of course, the date doesn’t really matter. What matters is the banks have taken over.

    I think the way to stop them is simple–take away their power to create money. That power should be returned to the people, either directly or through the government. Ellen Brown and others favor the government solution; I think that we’ve demonstrated that creating money out of thin air does not impede economic progress, so the people should be given the right to do it just like the banks do now, i.e., if you need more money, just create some from nothing.

    Just a thought.

  11. So called historians may disagree with my analysis
    of how we got here and what needs to be done to salvage the situation, but for what it is worth, here goes.
    The problem is almost as old as the Republic itself. It goes back to the dispute between the early
    Federalists (led by Hamilton) and the Democratic-Republicans (led by Jefferson).
    The Federalists wanted a government owned Central Bank to prevent predatory banking interest from Europe taking over America’s finances.
    The Jeffersonians opposed this idea, because they feared a strong central government. ( The exception in Jefferson’s attitude was when he was
    calling for War against Great Britain in 1812 in order
    to take Canada and expell the British from North America). This war monger egalitarian, who never
    fought in a war himself, thought it would be so easy,
    it would only be a “matter of marching”. Many of our
    politicians today adore this slave owning hippocrit
    of egalitarianism. They also adore Andrew Jackson,
    a blood thirsty, so called “bank hating” egalitarian
    democrat who handed America’s finances over to
    the very people he despised, when he destroyed the
    2nd US Bank. He also hated a “strong Central government” and uttered the famous quote “to the
    victors go the spoils” thus enthroning corruption and warfare as twin American “virtues” which eventually
    led to the Civil War and the destruction of his beloved
    Unless we can get rid of these myths about these
    two idiotic, insane leaders, no progress can be made
    in reforming our government.
    Hamilton and the Federalists were the true patriots
    of their day. They wanted a government owned Central
    Bank, controlled by Congress and a strong Central
    Government to guide the destiny of the Nation in order
    to insure Peace, security and Home Rule for America.
    The Federalist Party was destroyed mainly because of their opposition to the War of 1812.
    What we need to do is resurrect America’s original
    political party and the ideas it stood for. Somehow we
    need to get rid of the corrupt Republicrats and return
    to the fundamentals like a strong Government owned
    Central Bank to put the Nations financial house in order by rescheduling the National Debt over 20 years
    and ushering in a “gentle managed deflation” to restore the value of the dollar. All foreign entangling
    alliances need to be reevaluated and our troops returned from overseas. We need a return to an America First policy instead of trying to be the world’s
    I call on all ex-military officers who understand the
    problem and the solution to throw their hats in the
    ring and run for Congress or the Senate as Federalists. Let’s take back our Country from these
    corrupt morons who presently sit in Congress.
    To grow a new garden, you have to first get rid of the

  12. Why are we so afraid of Fascism , Communism or

    Socialism ,,, or Dictatorship …when we have

    ” Corporatism ” …..Welcome to the Brave New World.

    Great article Mr.Garfield …


  13. glad I own a gun

  14. Welcome to the New World Order; we have arrived.


  15. When a man and his family go hungry, he will do what it takes, whatever it takes, including killing someone else or robbing them of their food (possibly killing them in the process) in order to survive. Thomas Jefferson ages ago stated that a revolution every 20 years was necessary to keep the government honest … we are long overdue.

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