This hearing, entitled "Fractional Reserve Banking and the Federal Reserve: The Economic Consequences of High-Powered Money," will be held on Thursday, June 28, at 2:00 p.m. in room 2128 of the Rayburn House Office Building.
Witnesses scheduled to testify:
Dr. John Cochran, Emeritus Professor of Economics and Emeritus Dean, School of Business, Metropolitan State College of Denver Dr. Joseph Salerno, Professor of Economics, Lubin School of Business, Pace University Dr. Lawrence H. White, Professors of Economics, George Mason University
"Fractional reserve banking underpins the entire banking system, yet its effects on society are completely ignored. Our financial system consists of vast amounts of credit pyramided on top of very small amounts of real savings-- all backstopped by explicit and implicit government guarantees. This poses significant risks to the stability of the economy and monetary system, which ought to give pause to any serious observer of financial markets. Hopefully this hearing will create a greater understanding among the American people about the nature of the banking system, and begin the movement towards serious systematic reform. The American people deserve a financial system that is stable and efficient; one that operates without taxpayer subsidies and bailouts." - Congressman Ron Paul
Hearing June 28 2012 Fractional Reserve Banking
Saturday, June 30, 2012
Friday, June 29, 2012
Do We Really Need a Central Bank? | Steven Horwitz
Steven Horwitz gave this lecture entitled "Do We Really Need a Central Bank?" at the Future of Freedom Foundation's Economic Liberty Lecture Series at George Mason University on December 2, 2009.
Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University in Canton, NY. He is the author of two books, Microfoundations and Macroeconomics: An Austrian Perspective (Routledge, 2000) and Monetary Evolution, Free Banking, and Economic Order (Westview, 1992), and he has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and the economics and social theory of gender and the family.
His work has been published in professional journals such as History of Political Economy, Southern Economic Journal, and The Cambridge Journal of Economics. He has also done public policy research for the Mercatus Center, Heartland Institute, Citizens for a Sound Economy, and the Cato Institute. His current project is a book tentatively titled Classical Liberalism and the Evolution of the Modern Family. Horwitz currently serves as the book review editor of The Review of Austrian Economics and as an academic advisor for the Heartland Institute and a contributing editor to Critical Review and Journal des Economistes et des Etudes Humaines. A member of the Mont Pelerin Society, he completed his MA and PhD in economics at George Mason University and received his A.B. in economics and philosophy from The University of Michigan.
Steven Horwitz at FFF: "Do We Really Need a Central Bank?"
Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University in Canton, NY. He is the author of two books, Microfoundations and Macroeconomics: An Austrian Perspective (Routledge, 2000) and Monetary Evolution, Free Banking, and Economic Order (Westview, 1992), and he has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and the economics and social theory of gender and the family.
His work has been published in professional journals such as History of Political Economy, Southern Economic Journal, and The Cambridge Journal of Economics. He has also done public policy research for the Mercatus Center, Heartland Institute, Citizens for a Sound Economy, and the Cato Institute. His current project is a book tentatively titled Classical Liberalism and the Evolution of the Modern Family. Horwitz currently serves as the book review editor of The Review of Austrian Economics and as an academic advisor for the Heartland Institute and a contributing editor to Critical Review and Journal des Economistes et des Etudes Humaines. A member of the Mont Pelerin Society, he completed his MA and PhD in economics at George Mason University and received his A.B. in economics and philosophy from The University of Michigan.
Steven Horwitz at FFF: "Do We Really Need a Central Bank?"
MUST WATCH! Four Principles for the Open World | Don Tapscott [TED]
The recent generations have been bathed in connecting technology from birth, says futurist Don Tapscott, and as a result the world is transforming into one that is far more open and transparent. In this inspiring talk, he lists the four core principles that show how this open world can be a far better place.
Don Tapscott: Four principles for the open world
Don Tapscott: Four principles for the open world
MUST READ! A Conversation With Bill Gates About the Future of Higher Education
Bill Gates never finished college, but he is one of the single most powerful figures shaping higher education today. That influence comes through the Bill & Melinda Gates Foundation, perhaps the world's richest philanthropy, which he co-chairs and which has made education one of its key missions.
The Chronicle sat down with Mr. Gates in an exclusive interview Monday to talk about his vision for how colleges can be transformed through technology. His approach is not simply to drop in tablet computers or other gadgets and hope change happens—a model he said has a "really horrible track record." Instead, the foundation awards grants to reformers working to fix "inefficiencies" in the current model of higher education that keep many students from graduating on time, or at all. And he argues for radical reform of college teaching, advocating a move toward a "flipped" classroom, where students watch videos from superstar professors as homework and use class time for group projects and other interactive activities. As he put it, "having a lot of kids sit in the lecture class will be viewed at some point as an antiquated thing."
The Microsoft founder doesn't claim to have all the answers. In fact, he describes the foundation's process as one of continual refinement: "to learn, make mistakes, try new things out, find new partners to do things."
The interview comes on the eve of Mr. Gates's keynote speech at an event Tuesday to celebrate the 150th anniversary of the Morrill Act, which created the nationwide system of land-grant colleges. The "convocation" will be held in Washington, D.C., sponsored by the Association of Public Land-Grant Universities.
Q. You have been interested in education for quite a while. I was looking back at your 1995 book, The Road Ahead, and you laid out a vision of education and how it could be transformed with technology. It seems like some of that vision is still only just emerging, so many years later. Did it take longer than you thought it would?
A. Oh sure. Education has not been changed. That is, institutional education, whether it's K-12 or higher education, has not been substantially changed by the Internet. And we've seen that with other waves of technology. Where we had broadcast TV people thought would change things. We had early time-sharing computing—so-called CAI, computer-assisted instruction—where people could do these drills, and people thought that would change things. So it's easy to say that people have been overoptimistic in the past. But I think this wave is quite different. I think it's more fundamental. And we can say that individual education has changed. That is, for the highly-motivated student, the ability to go online and find lectures of various length—to see class materials—there's a lot of people who are learning far better because of those materials. But it's much harder to then take it for the broad set of students in the institutional framework and decide, OK, where is technology the best and where is the face-to-face the best. And they don't have very good metrics of what is their value-added. If you try and compare two universities, you'll find out a lot more about the inputs—this university has high SAT scores compared to this one. And it's sort of the opposite of what you'd think. You'd think people would say, "We take people with low SATs and make them really good lawyers." Instead they say, "We take people with very high SATs and we don't really know what we create, but at least they're smart when they show up here so maybe they still are when we're done with them." So it's a field without a kind of clear metric that then you can experiment and see if you're still continuing to achieve it.
Q. So who's to blame? Are there things like the U.S. News rankings or other pressures that give colleges the wrong incentives?
A. Well there certainly is a perverse set of incentives to a lot of universities to compete for the best students. And whether that comes out in terms of being more selective or investing in sort of the living experience, it's probably not where you'd like the innovation and energy to go. You'd like it to go into the completion rates, the quality of the employees that get generated by the learning experience. The various rankings have focused on the input side of the equation, not the output.
Q. There's a moving moment in Walter Isaacson's biography of Steve Jobs that describes a time when you visited Mr. Jobs at his house not long before his passing, and the two you reflected on the innovations you both led in technology. I understand that one thing Steve Jobs asked you that day was about how technology could change education. What did you tell him?
A. Well, I'd been involved in the education space because of my full-time foundation work. And so I'd been able to get out to various charter schools, to inner-city high schools, to community colleges, different universities, and learn about the financial situation about what discourages kids. And based on that, you get more of a sense of, OK where can technology come in? If the kids don't have to come to the campus quite as often, that would be good. But then what's the element that technology can't deliver? And it's through that that I really have developed a lot of optimism that we can build a hybrid. Something that's not purely digital but also that the efficiency of the face-to-face time is much greater. Where you take the kid who's demotivated or confused, or where something needs to be a group collaboration as opposed to the lecture. So I talked about the vision and what type of innovators we should draw in.
Q. Getting to some of those ideas, you're famously not a college graduate, since you left Harvard early to start Microsoft. So I'm curious what you think of EdX out of Harvard and MIT. What do you think of that model of certificates or badges for taking free online courses?
A. Well at the end of the day you've got to have something that employers really believe in. And today what they believe in by and large are degrees. And if you have a great degree then you're considered for jobs, and if you don't have that degree there's a lot of jobs you won't get consideration for. And so the question is, Can we transform this credentialing process? And in fact the ideal would be to separate out the idea of proving your knowledge from the way you acquire that knowledge. So even though I only have a high-school degree, I am a professional student. That is, I like to watch courses and do things online. So things like OpenCourseWare, the various lectures that have been put online, I consume a lot of those because I'm very interested.
Continue reading - A Conversation With Bill Gates About the Future of Higher Education
On Business's Role in Higher Education
On Tablets in the Classroom
On the Meaning of MOOC's
On the Role of Technology in Academe
On the Future of His Foundation
On the Future of ‘Place-Based’ Colleges
On Why There Won’t Be a Gates U.
The Chronicle sat down with Mr. Gates in an exclusive interview Monday to talk about his vision for how colleges can be transformed through technology. His approach is not simply to drop in tablet computers or other gadgets and hope change happens—a model he said has a "really horrible track record." Instead, the foundation awards grants to reformers working to fix "inefficiencies" in the current model of higher education that keep many students from graduating on time, or at all. And he argues for radical reform of college teaching, advocating a move toward a "flipped" classroom, where students watch videos from superstar professors as homework and use class time for group projects and other interactive activities. As he put it, "having a lot of kids sit in the lecture class will be viewed at some point as an antiquated thing."
The Microsoft founder doesn't claim to have all the answers. In fact, he describes the foundation's process as one of continual refinement: "to learn, make mistakes, try new things out, find new partners to do things."
The interview comes on the eve of Mr. Gates's keynote speech at an event Tuesday to celebrate the 150th anniversary of the Morrill Act, which created the nationwide system of land-grant colleges. The "convocation" will be held in Washington, D.C., sponsored by the Association of Public Land-Grant Universities.
Q. You have been interested in education for quite a while. I was looking back at your 1995 book, The Road Ahead, and you laid out a vision of education and how it could be transformed with technology. It seems like some of that vision is still only just emerging, so many years later. Did it take longer than you thought it would?
A. Oh sure. Education has not been changed. That is, institutional education, whether it's K-12 or higher education, has not been substantially changed by the Internet. And we've seen that with other waves of technology. Where we had broadcast TV people thought would change things. We had early time-sharing computing—so-called CAI, computer-assisted instruction—where people could do these drills, and people thought that would change things. So it's easy to say that people have been overoptimistic in the past. But I think this wave is quite different. I think it's more fundamental. And we can say that individual education has changed. That is, for the highly-motivated student, the ability to go online and find lectures of various length—to see class materials—there's a lot of people who are learning far better because of those materials. But it's much harder to then take it for the broad set of students in the institutional framework and decide, OK, where is technology the best and where is the face-to-face the best. And they don't have very good metrics of what is their value-added. If you try and compare two universities, you'll find out a lot more about the inputs—this university has high SAT scores compared to this one. And it's sort of the opposite of what you'd think. You'd think people would say, "We take people with low SATs and make them really good lawyers." Instead they say, "We take people with very high SATs and we don't really know what we create, but at least they're smart when they show up here so maybe they still are when we're done with them." So it's a field without a kind of clear metric that then you can experiment and see if you're still continuing to achieve it.
Q. So who's to blame? Are there things like the U.S. News rankings or other pressures that give colleges the wrong incentives?
A. Well there certainly is a perverse set of incentives to a lot of universities to compete for the best students. And whether that comes out in terms of being more selective or investing in sort of the living experience, it's probably not where you'd like the innovation and energy to go. You'd like it to go into the completion rates, the quality of the employees that get generated by the learning experience. The various rankings have focused on the input side of the equation, not the output.
Q. There's a moving moment in Walter Isaacson's biography of Steve Jobs that describes a time when you visited Mr. Jobs at his house not long before his passing, and the two you reflected on the innovations you both led in technology. I understand that one thing Steve Jobs asked you that day was about how technology could change education. What did you tell him?
A. Well, I'd been involved in the education space because of my full-time foundation work. And so I'd been able to get out to various charter schools, to inner-city high schools, to community colleges, different universities, and learn about the financial situation about what discourages kids. And based on that, you get more of a sense of, OK where can technology come in? If the kids don't have to come to the campus quite as often, that would be good. But then what's the element that technology can't deliver? And it's through that that I really have developed a lot of optimism that we can build a hybrid. Something that's not purely digital but also that the efficiency of the face-to-face time is much greater. Where you take the kid who's demotivated or confused, or where something needs to be a group collaboration as opposed to the lecture. So I talked about the vision and what type of innovators we should draw in.
Q. Getting to some of those ideas, you're famously not a college graduate, since you left Harvard early to start Microsoft. So I'm curious what you think of EdX out of Harvard and MIT. What do you think of that model of certificates or badges for taking free online courses?
A. Well at the end of the day you've got to have something that employers really believe in. And today what they believe in by and large are degrees. And if you have a great degree then you're considered for jobs, and if you don't have that degree there's a lot of jobs you won't get consideration for. And so the question is, Can we transform this credentialing process? And in fact the ideal would be to separate out the idea of proving your knowledge from the way you acquire that knowledge. So even though I only have a high-school degree, I am a professional student. That is, I like to watch courses and do things online. So things like OpenCourseWare, the various lectures that have been put online, I consume a lot of those because I'm very interested.
Continue reading - A Conversation With Bill Gates About the Future of Higher Education
On Business's Role in Higher Education
On Tablets in the Classroom
On the Meaning of MOOC's
On the Role of Technology in Academe
On the Future of His Foundation
On the Future of ‘Place-Based’ Colleges
On Why There Won’t Be a Gates U.
Thursday, June 28, 2012
How Arduino Is Open-Sourcing Imagination | Massimo Banzi [TED]
Massimo Banzi helped invent the Arduino, a tiny, easy-to-use open-source microcontroller that's inspired thousands of people around the world to make the coolest things they can imagine -- from toys to satellite gear. Because, as he says, "You don't need anyone's permission to make something great."
Massimo Banzi: How Arduino is open-sourcing imagination
Massimo Banzi: How Arduino is open-sourcing imagination
Amazing Google Glasses Demonstration at Google I/O 2012 | Project Glass
Google Glasses Live Demonstration - During the Google I/O 2012 keynote, the audience was about to experience an amazing demonstration of Google Glasses.
Amazing Google Glasses Demonstration at Google I/O 2012
Amazing Google Glasses Demonstration at Google I/O 2012
Monday, June 25, 2012
Driving Innovation & Breakthroughs | Peter Diamandis | Singularity University
Peter Diamandis shares his insights on exponentially growing technologies.
Abundance - Peter Diamandis
Extra: At Singularity University: World's biggest problems also biggest market opportunities
Abundance - Peter Diamandis
Extra: At Singularity University: World's biggest problems also biggest market opportunities
A New Type of Mathematics | David Dalrymple [TEDx]
Accepted to MIT graduate school at 14 years old — the youngest ever — David Dalrymple will share his deep insight into the future of mathematics.
TEDxMontreal - David Dalrymple - A new type of mathematics
TEDxMontreal - David Dalrymple - A new type of mathematics
MIND-BLOWING SPEECH! Victoria Grant, a 12-year old girl, Explains The Banking System
12-year old Victoria Grant explains why her homeland, Canada, and most of the world, is in debt. April 27, 2012 at the Public Banking in America Conference, Philadelphia, PA.
Victoria Grant
Victoria Grant
THE PRICE OF INEQUALITY: How Today's Divided Society Endangers Our Future | Joseph Stiglitz
Joseph Stiglitz, Nobel Memorial Prize in Economic Sciences recipient (2001) , visited Google on June 12, 2012 to talk about his new book THE PRICE OF INEQUALITY: How Today's Divided Society Endangers Our Future.
The 1 Percent's Problem
"Why won't America's 1 percent—such as the six Walmart heirs, whose wealth equals that of the entire bottom 30 percent—be a bit more . . . selfish? As the widening financial divide cripples the U.S. economy, even those at the top will pay a steep price."
Authors@Google: Joseph Stiglitz
The 1 Percent's Problem
"Why won't America's 1 percent—such as the six Walmart heirs, whose wealth equals that of the entire bottom 30 percent—be a bit more . . . selfish? As the widening financial divide cripples the U.S. economy, even those at the top will pay a steep price."
Authors@Google: Joseph Stiglitz
Out-of Body Experiences, Consciousness, and Cognitive Neuroprosthetics | Olaf Blanke [TEDx]
What is a conscious self ? What exactly makes an experience a subjective phenomenon ?
Starting with the neurology of out-of-body experiences and the breakdown of bodily mechanisms of self-consciousness, this talk presents novel neuroscience data on selfconsciousness and subjectivity in healthy subjects using techniques from cognitive neuroscience and engineering-based technologies such as virtual reality and robotics. It translates these research findings to the bedside and show how control over the brain mechanisms of our daily "inside--body experience" can join forces with neuro-engineering and thus impact treatments for patients with amputation and spinal cord injury.
Olaf Blanke is director of the Center for Neuroprosthetics at the Ecole Polytechnique Fédérale de Lausanne (EPFL), holds the Bertarelli Foundation Chair in Cognitive Neuroprosthetics, and is consultant neurologist at the Department of Neurology (Geneva University Hospital). He received his MD and PhD in neurophysiology from the Free University of Berlin. Blanke's research targets the brain mechanisms of body perception, corporeal awareness and selfconsciousness, applying paradigms from cognitive science, neuroscience, neuroimaging, robotics, and virtual reality in healthy subjects and neurological patients. His two main goals are to understand and control neural own body representations to develop a neurobiological model of self-consciousness and to apply these findings in the emerging field of cognitive and systems neuroprosthetics. His work has received wide press coverage; he is recipient of numerous awards.
TEDxCHUV - Olaf Blanke - Out-of Body Experiences, Consciousness, and Cognitive Neuroprosthetics
Starting with the neurology of out-of-body experiences and the breakdown of bodily mechanisms of self-consciousness, this talk presents novel neuroscience data on selfconsciousness and subjectivity in healthy subjects using techniques from cognitive neuroscience and engineering-based technologies such as virtual reality and robotics. It translates these research findings to the bedside and show how control over the brain mechanisms of our daily "inside--body experience" can join forces with neuro-engineering and thus impact treatments for patients with amputation and spinal cord injury.
Olaf Blanke is director of the Center for Neuroprosthetics at the Ecole Polytechnique Fédérale de Lausanne (EPFL), holds the Bertarelli Foundation Chair in Cognitive Neuroprosthetics, and is consultant neurologist at the Department of Neurology (Geneva University Hospital). He received his MD and PhD in neurophysiology from the Free University of Berlin. Blanke's research targets the brain mechanisms of body perception, corporeal awareness and selfconsciousness, applying paradigms from cognitive science, neuroscience, neuroimaging, robotics, and virtual reality in healthy subjects and neurological patients. His two main goals are to understand and control neural own body representations to develop a neurobiological model of self-consciousness and to apply these findings in the emerging field of cognitive and systems neuroprosthetics. His work has received wide press coverage; he is recipient of numerous awards.
TEDxCHUV - Olaf Blanke - Out-of Body Experiences, Consciousness, and Cognitive Neuroprosthetics
Understanding the Human Brain: A Test of Global Collaboration | Henry Markram [TEDx]
Knowledge of the brain is highly fragmented and we have no way to prioritize the many experiments needed to fill the gaps in our understanding. It is time for a strategy of global collaboration, where scientists of all disciplines work together to solve this problem. We propose building a platform to catalyze efforts, integrate knowledge, and use supercomputers to simulate what is known about the brain, to predict gaps in our knowledge of the brain, and to test hypotheses about how it works.
Henry Markram is the Coordinator of the Human Brain Project, a proposed international effort to understand the human brain. His research career started in medicine and neuroscience in South Africa, then at the Weizmann Institute in Israel, at NIH and UCSF in the United States, and the Max-Planck Institute in Germany. In 2002, he joined the EPFL, where he founded the Brain Mind Institute. His career has spanned a wide spectrum of neuroscience research, from whole animal studies to gene expression in single cells. He is best known for his work on synaptic plasticity. In the past 15 years he has focused on the structure and function of neural microcircuits -- the basic components in the architecture of the brain. In 2005, he launched the Blue Brain Project: the first attempt to begin a systematic integration of all biological knowledge of the brain into unifying brain models for simulation on supercomputers. The strategies, technologies and methods developed in this pioneering work lie at the heart of the Human Brain Project.
TEDxCHUV - Henry Markram - Understanding the Human Brain: a test of global collaboration
Henry Markram is the Coordinator of the Human Brain Project, a proposed international effort to understand the human brain. His research career started in medicine and neuroscience in South Africa, then at the Weizmann Institute in Israel, at NIH and UCSF in the United States, and the Max-Planck Institute in Germany. In 2002, he joined the EPFL, where he founded the Brain Mind Institute. His career has spanned a wide spectrum of neuroscience research, from whole animal studies to gene expression in single cells. He is best known for his work on synaptic plasticity. In the past 15 years he has focused on the structure and function of neural microcircuits -- the basic components in the architecture of the brain. In 2005, he launched the Blue Brain Project: the first attempt to begin a systematic integration of all biological knowledge of the brain into unifying brain models for simulation on supercomputers. The strategies, technologies and methods developed in this pioneering work lie at the heart of the Human Brain Project.
TEDxCHUV - Henry Markram - Understanding the Human Brain: a test of global collaboration
Sunday, June 24, 2012
MUST WATCH! Medicine's Future? There's An App For That | Daniel Kraft [TEDx]
At TEDxMaastricht, Daniel Kraft offers a fast-paced look at the next few years of innovations in medicine, powered by new tools, tests and apps that bring diagnostic information right to the patient's bedside.
Daniel Kraft: Medicine's future? There's an app for that
Daniel Kraft: Medicine's future? There's an app for that
Saturday, June 23, 2012
Quantum Computation | Michelle Simmons [TEDx]
There is a shift coming in the very nature of computing which is being led by the likes of quantum physicist Michelle Simmons. Michelle wants you to put the binary world of ones and zeros on the shelf for a moment, as she introduces you to the idea of computing with atoms.
Michelle has always wanted to undertake the hardest research in the hardest subject: quantum physics. Her eccentric schooling, coupled with the sudden death of her PhD supervisor means she has spent most of her career teaching herself. Michelle is the Director of Australia's Centre of Excellence for Quantum Computation and Communication Technology. This year, she and her team announced they had made the first ever single atom transistor. They now sit on the threshold of delivering the first ever quantum computer to the world.
TEDxSydney - Professor Michelle Simmons -- Quantum Computation
Michelle has always wanted to undertake the hardest research in the hardest subject: quantum physics. Her eccentric schooling, coupled with the sudden death of her PhD supervisor means she has spent most of her career teaching herself. Michelle is the Director of Australia's Centre of Excellence for Quantum Computation and Communication Technology. This year, she and her team announced they had made the first ever single atom transistor. They now sit on the threshold of delivering the first ever quantum computer to the world.
TEDxSydney - Professor Michelle Simmons -- Quantum Computation
Friday, June 22, 2012
MUST READ! The Scam Wall Street Learned From the Mafia | Matt Taibbi
Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won't hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you're probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government's massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony "Tony Ducks" Corallo.
But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.
The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.
In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What's more, in the manner of old mob trials, Wall Street's secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves' cant, or Italian mobsters who talked about "getting a button man to clip the capo," on tape after tape these Wall Street crooks coughed up phrases like "pull a nickel out" or "get to the right level" or "you're hanging out there" – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.
USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.
More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.
But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America's gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.
1. THE SCAM
This was no trial scene from popular lore, no Inherit the Wind or State of California v. Orenthal James Simpson. No gallery packed with rapt spectators, no ceiling fans set whirring to beat back the tension and the heat, no defense counsel's resting a sympathetic hand on the defendant's shoulder as opening statements commence. No, the setting for USA v. Carollo reflected the bizarre alternate universe that exists on Wall Street. Like so many court cases involving big banks, the proceeding looked more like a roomful of expensive lawyers negotiating a major corporate merger than a public search for justice.
The trial began on April 16th in a federal court in Lower Manhattan. The courtroom, an aerielike setting 23 stories up, offered a panoramic view of the city and the East River. Though the gallery was usually full throughout the three-plus weeks of testimony, the spectators were not average citizens come to witness how they had been robbed blind by America's biggest banks. Instead, there were row after row of suits – other lawyers eager to observe a long-awaited case, one that could influence the outcome in a handful of civil suits pending across the country. In fact, the defendants themselves, whom the trial would reveal as easily replaceable cogs in a much larger machine of corruption, were barely visible from the gallery, obscured by the great chattering congress of prosecution and defense attorneys.
Only the presence of the mostly nonwhite and elderly jury, which resembled the front pew of a Harlem church, served as a reminder that the case had any connection to the real world. Even reporters from most of the major news outlets didn't bother to attend. The judge in the trial, the right honorable and amusingly cantankerous Harold Baer, acknowledged that the case was not likely to set the public's pulse racing. "It is unlikely, I think, that this will generate a lot of media publicity," Baer sighed to the jury in his preliminary instructions.
Continue reading (Long read) - The Scam Wall Street Learned From the Mafia
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