Wall Street's War

Congress looked serious about finance reform – until America's biggest banks unleashed an army of 2,000 paid lobbyists.

It's early May in Washington, and something very weird is in the air. As Chris Dodd, Harry Reid and the rest of the compulsive dealmakers in the Senate barrel toward the finish line of the Restoring American Financial Stability Act – the massive, year-in-the-making effort to clean up the Wall Street crime swamp – word starts to spread on Capitol Hill that somebody forgot to kill the important reforms in the bill. As of the first week in May, the legislation still contains aggressive measures that could cost once-
indomitable behemoths like Goldman Sachs and JP Morgan Chase tens of billions of dollars. Somehow, the bill has escaped the usual Senate-whorehouse orgy of mutual back-scratching, fine-print compromises and freeway-wide loopholes that screw any chance of meaningful change.

The real shocker is a thing known among Senate insiders as "716." This section of an amendment would force America's banking giants to either forgo their access to the public teat they receive through the Federal Reserve's discount window, or give up the insanely risky, casino-style bets they've been making on derivatives. That means no more pawning off predatory interest-rate swaps on suckers in Greece, no more gathering balls of subprime shit into incomprehensible debt deals, no more getting idiot bookies like AIG to wrap the crappy mortgages in phony insurance. In short, 716 would take a chain saw to one of Wall Street's most lucrative profit centers: Five of America's biggest banks (Goldman, JP Morgan, Bank of America, Morgan Stanley and Citigroup) raked in some $30 billion in over-the-counter derivatives last year. By some estimates, more than half of JP Morgan's trading revenue between 2006 and 2008 came from such derivatives. If 716 goes through, it would be a veritable Hiroshima to the era of greed.

"When I first heard about 716, I thought, 'This is never gonna fly,'" says Adam White, a derivatives expert who has been among the most vocal advocates for reform. When I speak to him early in May, he sounds slightly befuddled, like he can't believe his good fortune. "It's funny," he says. "We keep waiting for the watering-down to take place – but we keep getting to the next hurdle, and it's still staying strong."

In the weeks leading up to the vote on the reform bill, I hear one variation or another on this same theme from Senate insiders: that the usual process of chipping away at key legislation is not taking place with its customary dispatch, despite a full-court press by Wall Street. The financial-services industry has reportedly flooded the Capitol with more than 2,000 paid lobbyists; even veteran members are stunned by the intensity of the blitz. "They're trying everything," says Sen. Sherrod Brown, a Democrat from Ohio. Wall Street's army is especially imposing given that the main (really, the only) progressive coalition working the other side of the aisle, Americans for Financial Reform, has been in existence less than a year – and has just 60 unpaid "volunteer" lobbyists working the Senate halls.

Continue reading - Matt Taibbi - Wall Street's War

BREAKTHROUGH! Quantum leap: World's smallest transistor built with just 7 atoms

(PhysOrg.com) -- Scientists have literally taken a leap into a new era of computing power by making the world's smallest precision-built transistor - a "quantum dot" of just seven atoms in a single silicon crystal. Despite its incredibly tiny size - a mere four billionths of a metre long - the quantum dot is a functioning electronic device, the world's first created deliberately by placing individual atoms.

It can be used to regulate and control electrical current flow like a commercial transistor but it represents a key step into a new age of atomic-scale miniaturisation and super-fast, super-powerful computers.

"The significance of this achievement is that we are not just moving atoms around or looking at them through a microscope," says co-author Professor Michelle Simmons, Director of the CQCT, an Australian Research Council Centre of Excellence. "We are manipulating individual atoms and placing them with atomic precision, in order to make a working electronic device.

"The Australian team has been able to fabricate an electronic device entirely out of crystalline silicon where we have replaced just seven individual silicon atoms with phosphorus atoms. That is amazing exactness.

"This is a huge technological achievement and it is a critical step to demonstrating that it is possible to build the ultimate computer - a quantum computer in silicon."

Continue reading - Quantum leap: World's smallest transistor built with just 7 atoms

Here we come, Singularity!

BREAKTHROUGH! Synthetic Life Created In The Laboratory

Researchers in the US have developed the first synthetic living cell. Their work, which many scientists have called a landmark study, is a key step towards the design and creation of new living things. BBC News examines the issues raised by this controversial breakthrough.

Have these scientists created synthetic life?

They are calling this a synthetic living cell. But they did use an existing cell as a template and as a recipient for their home-made DNA. Strictly speaking, it is only the genome - the DNA in the cell - that is entirely synthetic.

This bacterial cell, the researchers say, is the first life form to be entirely controlled by synthetic DNA.

The researchers also employed "nature's tools" to build their new chromosome (the package of DNA that contains all of the genetic material the cell needs to live and function).

They chemically constructed blocks of DNA then inserted them into yeast cells, which assembled the blocks into a complete bacterial chromosome.

Some critics have accused Dr Venter and his colleagues of "playing God" and believe that it should not be a role for humans to design new life.

There are also concerns about the safety of this new technology.

"But the risks are also unparalleled," he continues. "We need new standards of safety evaluation for this kind of radical research and protections from military or terrorist misuse and abuse.

These could be used in the future to make the most powerful bioweapons imaginable. The challenge is to eat the fruit without the worm."

Continue reading -
BBC - 'Artificial life' breakthrough announced by scientists
WIRED - Scientists Create First Self-Replicating Synthetic Life

There goes a whole new paradigm!

Craig Venter unveils "synthetic life"

Craig Venter and team make a historic announcement: they've created the first fully functioning, reproducing cell controlled by synthetic DNA. He explains how they did it and why the achievement marks the beginning of a new era for science.

Ron Paul: Stop Bailing Out Foreign Governments!

Ron Paul addressed a joint hearing of the Subcommittee on International Monetary Policy and Trade and the Subcommittee on Domestic Monetary Policy and Technology today. The hearing was entitled “The Role of the International Monetary Fund and Federal Reserve in Stabilizing Europe”.

Ron Paul: Stop Bailing Out Foreign Governments!

The Empathic Civilization

Bestselling author, political adviser and social and ethical prophet Jeremy Rifkin investigates the evolution of empathy and the profound ways that it has shaped our development and our society.

RSA Animate - The Empathic Civilization

Richard Dawkins: If Science Worked Like Religion

Richard Dawkins gave this lecture on The God Delusion during his US Tour. The event took place on the UC Berkeley campus in Wheeler Auditorium. Here is a clip from Richard Dawkins' Lecture at UC Berkeley.

Richard Dawkins: If Science Worked Like Religion

Meltup

Meltup, the new Inflation.us documentary featuring Ron Paul, Peter Schiff, Tom Woods, Marc Faber, Jim Rogers and the great Gerald Celente.

Meltup


Meltup Update 14/6/10

Fed Intervenes in European Debt Crisis - Another Trillion Mega-Bailout

WASHINGTON — After months of quietly watching from the sidelines, the United States finally intervened in the European debt crisis on Sunday night.

The Federal Reserve announced that it would open currency swap lines with the European Central Bank — in essence, printing dollars and exchanging them for euros to provide some liquidity for European money markets and banks.

The step came after a hectic week in which Washington began to fear that the sovereign debt crisis threatened to infect the American economy and hamper its recovery, according to several United States officials.

The intervention, which also involves the central banks of England, Switzerland, Canada and Japan, is part of a colossal package intended to quell the restive credit markets with a show of force and resolve that American policymakers had quietly believed was lacking. The package has two other elements: about $950 billion in loan guarantees from the European Union, and a decision by the European Central Bank to intervene in the bond markets through a series of refinancing operations.

An initial rescue package for Greece, totaling around $140 billion, failed to calm investors last week. The sudden plunge in the stock market on Thursday exacerbated the worries of American officials.

Continue reading - NY Times - Fed Intervenes in European Debt Crisis

Ron Paul: Money Isn't Worth What It Used To Be!

Ron Paul: Money Isn't Worth What It Used To Be!

Volcker Letter to Dodd and Shelby Opposing Audit the Fed Bill

Dear Chairman Dodd and Senator Shelby:

I am writing about an issue bearing upon the Federal Reserve’s independence in conducting monetary policy that has long concerned me. I understand legislation is now being considered by the Senate.

The desire of the Congress to review the auditing arrangements for the Federal Reserve in the light of the extraordinary actions taken during the financial crisis is understandable. The Congress and the public need to be assured that such emergency action be taken with regard for professional standards and protecting the taxpayer’s interest.

Decades ago, during my own tenure at the Federal Reserve, an agreed approach toward GAO audits of the Federal Reserve carefully protected, as the relevant Senate Committee report of the time indicated, the Fed’s ability to “independently conduct the Nation’s monetary policy”. The point is that a threat to expose the details of active debate within the Federal Reserve about monetary policy decisions would tend to constraint that debate, expose the policy-making process to greater political pressure, affect markets, and risk the release of sensitive information about particular institutions and relationships with foreign authorities.

Consequently, I encourage the Senate to consider measures as now proposed in S.3217 that would provide the Congress with the information it needs to assess the implementation of the Federal Reserve’s unusual lending activities. At the same time it would preserve the confidentiality of the Federal Reserve in its deliberative processes to the extent needed to conduct monetary policy independently.

I am sending copies of this letter to Senators Cardin, Feinstein, Landrieu, Levin, Merkeley and Murray.

Sincerely,

Paul Volcker

Senate Sellout Threatens Congressman Paul’s “Audit the Fed” Bill

“Bernie Sanders has sold out and sided with Chris Dodd to gut Audit the Fed in the Senate. His “compromise” is what the Administration and banking interests want: they’ll allow the TARP and TALF to be audited, but no transparency of the FOMC, discount window operations or agreement with foreign central banks. We need to take action and stop this!” -Ron Paul

Washington, D.C. – Congressman Ron Paul (TX-14) expressed disappointment that his landmark legislation to audit the Federal Reserve Bank – which passed by a wide margin in the House Financial Services committee and has over 319 House co-sponsors – was threatened by a compromise in the Senate today.

More specifically, Paul’s language (passed by the House) to audit the Federal Reserve has been stripped from the Sanders Amendment to the Senate financial reform bill. Instead, the Sanders Amendment now contains softer compromise language that exempts monetary policy decisions, discount window operations, and agreements with foreign central banks from Government Accounting Office (“GAO”) audit.

This is of particular concern when several countries such as Greece, Portugal, and Spain are seeking IMF help in the midst of their financial crises, because American taxpayers provide fully 17% of all IMF funding.

“Taxpayers are weary of bailing out privileged banks and corporations in the US, and we certainly cannot afford to bail out entire countries. The possibility of this happening behind a veil of Federal Reserve secrecy is not acceptable,” stated Congressman Paul. “This compromise language represents a huge missed opportunity by Congress to finally make the Fed accountable for trillions of taxpayer dollars it administers. Full transparency, via a full GAO audit, is the only acceptable option. However, I am grateful to Senator Vitter for offering the original full audit language in an alternative amendment to the bill.”

Senate Sellout Threatens Ron Paul's Audit the Fed Bill

Bernanke Letter to Dodd Opposing Amendments to Audit the Fed

The following is the full text of a letter Federal Reserve Chairman Ben Bernanke sent to Senate Banking Committee Chairman Christopher Dodd over a proposed amendment to the financial overhaul to audit the Fed.

Dear Chairman:

I am writing to express my deep concern about possible amendments to the Senate financial regulatory reform bill (S. 3217) that would, for the first time, permit the Government Accountability Office (GAO) to audit monetary policy deliberations and operations. Such amendments, if enacted, would seriously threaten monetary policy independence, increase inflation fears and market interest rates, and damage economic stability and job creation.

The Congress and the American people have a right to know how the Federal Reserve is carrying out its responsibilities and how we are using taxpayers’ resources. I strongly supported greater openness before I came to the Federal Reserve and now, as Chairman, I believe in it even more so.

In fact, during my tenure, the Federal Reserve has increased its commitment to transparency in a variety of ways, including the creation of a monthly report that provides Congress and the public detailed information on the range of programs and tools that the Federal Reserve has used to respond to the financial crisis as well as our open market activities and lending to depository institutions. Importantly, these monthly reports provide the number and distribution of borrowers under each lending facility established under section 13(3) of the Federal Reserve Act; the value, type, and quality of the collateral that secures advances under each facility; and trends in borrowing under the facilities.

Moreover, the financial statements of the Federal Reserve, including both the Board of Governors and the Federal Reserve Banks, are already fully audited by an independent accounting firm that ensures that the financial statements completely and accurately report the financial condition of the Federal Reserve System. These audited financial statements are made available to the public, both in print and on our website, and are submitted annually to the Congress.

There appears to be a widespread misconception about the role the GAO already plays in oversight of the Federal Reserve. The GAO has the authority to audit and review all of the supervisory and regulatory functions of the Federal Reserve. In addition, the GAO is authorized to conduct audits of the credit extended by the Federal Reserve to specific companies under the authority provided by section 13(3) of the Federal Reserve Act, including the loans to American International Group, Bear Steams and the Maiden Lane entities. Indeed, I have personally welcomed and encouraged the GAO to conduct a full and complete audit of the Federal Reserve’s lending facilities for AIG and the Federal Reserve has been cooperating with the GAO in its review of the two Maiden Lane facilities related to AIG.

Continue reading - Bernanke Letter to Dodd Opposing Amendments to Audit the Fed

Today Greece, Tomorrow the World

Greece is just the beginning. The crisis will spread across Europe and finally to the United States. The US will be the last to fall because we have the dollar, and people still believe in the dollar.

Ron Paul: Greece is just the beginning!

Greece Riots

ATHENS—A nationwide general strike paralyzed Greece on Wednesday as protests against the government's recently announced austerity measures turned violent, with an apparent firebomb attack on a central Athens bank killing three people.

Wednesday's 24-hour strike is seen as a key test of the government's ability to shepherd through tough austerity measures in exchange for a €110 billion ($143 billion) bailout loan from the European Union and the International Monetary Fund.

The strike coincided with protests that brought out tens of thousands of Greeks, one of the country's largest protests in years. Angry youths rampaged through the center of Athens, torching several businesses and smashing shop windows.

Greece's government, facing spiraling borrowing costs and a debt payment this month that it can't meet, is scrambling to pass through legislation implementing a three-year austerity and reform program it agreed to as part of the loan deal with the EU and IMF. Parliament is expected to vote as soon as Thursday on the measures.

Under terms of the bailout deal, Greece's government has announced a €30 billion package of measures that will slash public-sector wages, cut pensions, freeze public- and private-sector pay and liberalize Greece's labor laws. In addition, Greece has pledged to raise taxes—including a two-percentage-point increase in Greece's top value-added tax rate, to 23%—and to increase excise taxes for fuel, tobacco and alcohol.

Some officials saw a broader shift behind the protests. Tens of thousands of ordinary Greeks turned out to express their disenchantment with the current and previous Greek governments, whose corruption and accounting legerdemain they see as spurring the current budget crisis. "We may have an uprising in the making," said one senior government official.

"This rally was double the size of the largest rally that has ever been held in Greece," said Spyros Papaspyros, president of Adedy, a civil-service umbrella union. "Tomorrow afternoon, we will also be holding a protest in front of parliament, and if the government doesn't listen, there will be more strike action next week."

Wednesday's 24-hour general strike hobbled government services across Greece, shutting ministries and public offices. State hospitals and public utilities were operating with skeleton staff. Shopkeepers joined the strike at midday local time, while journalists, bank workers, teachers, court workers, lawyers and doctors also walked off the job. All flights in and out of Greek airports were canceled, while rail and ferry operations nationwide have been suspended.

Continue reading - Three Killed in Fire as Strikes Grip Greece

Seeing is believing.

Greek protests turn deadly


Greece riots: 100,000 fight against harsh cuts in Athens financial crisis protests


Clashes at Greek protests over budget cuts


Euro dream over? Death over debt looms as Greece financial crisis spreads


Eurozone under warfare: Engdahl on Greece crisis

Barney Frank in 2005: What Housing Bubble?

A speech by Barney Frank, Chairman of the House Financial Services Committee, on the House Floor in 2005 where he refutes any concern about a housing industry bubble and advocates for the government to continuing expanding home ownership.

Barney Frank in 2005: What Housing Bubble?

China Bank Reserve-Ratio Rise May Prove Insufficient

May 3 (Bloomberg) -- China’s third increase of bank reserve ratios this year left benchmark interest rates and the yuan’s peg to the dollar unchanged, risking the need for more concerted effort to contain property prices and inflation in coming months.

The requirement will increase 50 basis points effective May 10, the People’s Bank of China said on its Web site yesterday. The current level is 16.5 percent for the biggest banks and 14.5 percent for smaller ones.

The latest move adds to a government crackdown on property speculation after record price increases in March and came on a holiday weekend, with Chinese markets shut today. Within an hour of the central bank announcement, Finance Minister Xie Xuren said that officials remained committed to expansionary policies to cement the nation’s recovery.

“Beijing still prefers to fine-tune credit conditions and the property market rather than using blunter instruments that impact the entire economy,” said Brian Jackson, a Hong Kong- based strategist at Royal Bank of Canada. The danger is that the approach “will not be enough to keep these price pressures under control, which would then force policy makers to tighten more aggressively later on.”

Removing Cash

Yesterday’s decision will remove 300 billion yuan ($44 billion) from the financial system and may push back an interest-rate increase until “early June,” according to Deutsche Bank AG.

(*POOF* illusory credit disappeared, magic much?)

Continue reading - China Bank Reserve-Ratio Rise May Prove Insufficient

China May ‘Crash’ in Next 9 to 12 Months, Faber Says

May 3 (Bloomberg) -- Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.

“The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”

An index tracking Chinese stocks traded in Hong Kong dropped 1.8 percent today, the most in two weeks, after the central bank raised reserve requirements for the third time this year. The Shanghai Composite has slumped 12 percent this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday today.

Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China.

China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month. As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade.

The government has banned loans for third homes and raised mortgage rates and down-payment requirements for second-home purchases. Prices rose 11.7 percent across 70 cities in March from a year earlier, the most since data began in 2005.

The government has stopped short of raising interest rates to contain property prices. Within an hour of the central bank announcement on reserve ratios, Finance Minister Xie Xuren said that officials remained committed to expansionary policies to cement the nation’s recovery.

Continue reading - China May ‘Crash’ in Next 9 to 12 Months, Faber Says

Greenspan Wanted Housing-Bubble Dissent Kept Secret

As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn't lose control of the debate to people less well-informed than themselves.

"We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting.

At the same meeting, a Federal Reserve bank president from Atlanta, Jack Guynn, warned that "a number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida. Entire condo projects and upscale residential lots are being pre-sold before any construction, with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on 'flipping' the properties--selling them quickly at higher prices."

Had Guynn's warning been heeded and the housing market cooled, the financial collapse of 2008 could have been avoided. But his comment was kept secret until Friday, when the central bank released the transcripts of Federal Open Market Committee meetings for 2004 and CalculatedRisk spotted it. The transcripts for 2005 to the present are still secret.

Continue reading - Greenspan Wanted Housing-Bubble Dissent Kept Secret

Ron Paul and Alan Grayson: Audit the Fed!

Ron Paul and Alan Grayson appeared on MSNBC’s Dylan Ratigan Show to discuss their efforts to audit the secretive Federal Reserve.

Ron Paul and Alan Grayson: Audit the Fed!