The structure of financial controls created by the tycoons of big banking and big business in the period 1880 to 1933 was of extraordinary complexity. One business thief being built on another. Both being allied with semi-independent associates. The whole rearing upwards into two pinnacles of economic and financial power. One centred in New York was headed by J P Morgan and company. And the other in Ohio was headed by the Rockefeller Family. When these two cooperated, as the generally did, they could influence the economic life of the country to a large degree and could almost control its political life, at least on the federal level. In the United States it was inevitable that the international banking interests would attempt to establish the same kind of private monopoly over the money system that they had achieved in England, France, Germany, Italy and Switzerland. The same formula would be used: make it look like a government operation but keep the control in private hands. Professor Carroll Quigley, Tragedy & Hope
Whether it is really desirable to have such a thing as a Lender of Last Resort: the correct position appears to me that every single bank should be responsible for its own debts and contractual obligations. And if banks through imprudent policy then go bankrupt this should not be considered a bad thing but in fact considered to be a magnificent thing because bankruptcies, the danger of bankruptcies, is precisely what makes banks adhere to its own policies. Professor Hans-Hermann Hoppe
New York 2010 Jon Corzine: M F Global. Its business was brokerage ... Risk: MF Global would start taking risks itself in the market. Bankers II: Risking It All, BBC 2013
The story of how a London team of J P Morgan traders lost $6 billion last year shows how even a well-run bank can take ever more complex and risky gambles. ibid.
From the late 1990s banks lent around $1 trillion to Americans on low incomes to buy houses. ibid.
In 2008 the financial crash hit the world like a natural disaster. ibid.
Nothing on this scale had been predicted by Value at Risk. Nearly three trillion dollars was lost. ibid.
Synthetic derivatives: one of the biggest bets the world has ever seen. ibid.
One of the biggest financial bankruptcies since the crash: M F Global. ibid.
J P Morgan had little choice but to sell off the Whale Trades at a huge loss. ibid.
We economic hitmen really have been responsible for creating this first truly global empire. And we work many different ways. But perhaps the most common is that we will identify a country that has resources our corporations covet, like oil, and then arrange a huge loan to that country from the World Bank or one of its sister organisations. But the money never actually goes to the country. Instead it goes to our big corporations to build infrastructure projects in that country, power plants, industrial parks, ports, things that benefit a few rich people in that country in addition to our corporations ... The whole country is left holding a huge debt; such a big debt it can’t be paid, and that’s part of the plan. John Perkins, author Confessions of an Economic Hitman, economist Chas T Main Inc, interview Zeitgeist addendum 2008
Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the US Agency for International Development (USAID), and other foreign aid organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization. I should know; I was an EHM. ibid.
The United States spends over $87 billion conducting a war in Iraq while the United Nations estimates that for less than half that amount we could provide clean water, adequate diets, sanitations services and basic education to every person on the planet. And we wonder why terrorists attack us. ibid.
But in 2000 Iceland’s government began a broad policy of deregulation that would have disastrous consequences. Charles H Ferguson, Inside Job 2010
In a 5-year period these 3 tiny banks which had never operated outside of Iceland borrowed $120 billion – 10 x the size of Iceland’s economy. The bankers showered money on themselves, each other and their friends. ibid.
When Iceland’s banks collapsed at the end of 2008 unemployment tripled in 6 months. ibid.
In September 2008 the bankruptcy of US Investment Bank Lehman Brothers and the collapse of the world’s largest insurance company AIG triggered a global financial crisis. The result was a global recession. ibid.
This crisis was not an accident. It was caused by an out-of- control industry. ibid.
In the 1980s the financial industry exploded; the investment banks went public giving them huge amounts of stockholder money. People on Wall Street started getting rich. ibid.
By the end of the decade hundreds of savings and loans companies had failed ... Thousands of Savings & Loans executives went to jail for looting their companies. One of the most extreme cases was Charles Keating. ibid.
By the late 1990s the financial sector had consolidated into a few gigantic firms; each of them so large their failure could threaten the whole financial sector. ibid.
In December 2002 ten investment banks settled the case for a total of $1.4 billion and promised to mend their ways. ibid.
Since deregulation began the world’s biggest financial firms have been caught laundering money, defrauding customers and cooking their books again and again and again. ibid.
Using derivatives, Bankers could bet on virtually anything ... A $50 trillion unregulated market. ibid.
In the early 2000s there was a huge increase in the riskiest loans called subprimes. ibid.
The investment banks actually preferred subprime loans because they carried higher interest rates. ibid.
Lehman brothers was the top underwriter of subprime lending. ibid.
The Securities and Exchange Commission conducted no major investigations of the investment banks during the bubble. ibid.
Credit Default Swaps worked like an insurance policy ... Speculators could also buy Credit Default Swaps from AIG in order to bet against CDOs they didn’t own. ibid.
According to a Bloomberg article business entertainment represents 5% of revenue for New York derivatives traders and often includes strip clubs, prostitutes and drugs. ibid.
Goldman Sachs sold at least $3.1 billion of these toxic CDOs in the first half of 2006. ibid.
By late 2006 Goldman had taken things a step further: it didn’t just sell toxic CDOs it started actively betting against them at the same time. ibid.
The three ratings agencies – Moody’s, S & P [Standard & Poor] & Fitch made billions of dollars giving high ratings to risky securities. ibid.
As early as 2004 the FBI was already warning of an epidemic of mortgage fraud. ibid.
The market for CDOs collapsed. ibid.
In March 2008 the investment bank Bear Stearns ran out of cash and was acquired for $2 a share by J P Morgan Chase. The deal was backed by $30 billion in emergency guarantees from the Federal Reserve. ibid.
Neither Lehman nor the federal government had done any planning for bankruptcy. ibid.
The AIG bailout cost taxpayers over $150 billion. ibid.
The men who destroyed their own companies and plunged the world into crisis walked away from the wreckage with their fortunes intact. ibid.
It has corrupted the study of economics itself. ibid.
Even after the crisis many of them opposed reform. ibid.
Mid-2010: not a single financial executive had been criminally prosecuted or even arrested. ibid.
The financial system turned its back on society, corrupted our political system and plunged the world economy into crisis. ibid.
This is the story of the biggest financial catastrophe in living memory. An unprecedented boom has morphed into bust. It’s the story of how a desperate government fought to prevent a banking meltdown. Will Hutton, Dispatches: Crash: How Long Will It Last? Channel 4 2009
It turned banks into branches of a gigantic global betting shop. ibid.
The bankers sold trillions of dollars of complex new financial products. But their values depended on real things like US house prices. ibid.
Summer 2007 saw the first financial earth tremors. ibid.
Northern Rock had been a dramatic example of how banks ran out of cash when the money markets froze on them. It was not heeded. ibid.
By 2008 RBS had leant more than Britain’s annual gross domestic product, but its balance sheet was a high risk mess of subprime mortgages and bad loans. ibid.
Brown’s faith in the city had betrayed him. ibid.
Brown had combined decisiveness with weakness. He’d shied away from taking a stake in all of the banks, and for the £37 billion he’d handed over, he demanded no direct control or restructuring. Even bonuses were not directly capped. ibid.
Britain’s lead was now being followed in Washington. ibid.