THEY HAVE GONE TOO FAR- WE HAVE CAUGHT THEM IN THEIR OWN LIE

Bear with me here.

"The New York Federal Reserve Bank president has been at the center of frantic behind-the-scenes efforts to stem the spread of the U.S. credit collapse, TO MANAGE THE BANK RUN THAT BROUGHT DOWN BEAR STEARNS, and many crises before it"

http://www.newsweek.com/i...

written by David Rothkobf

From the World Economic Forum

David Rothkopf, Chief Executive Officer, Intellibridge Corporation, USA

Personal Profile: Co-Creator & Coordinating Producer, Flashpoint OMNI TV series; Publisher, Special Publications, VP & Marketing Director & V.P. & Managing Editor, Institutional Investor; Co-Founder, Chairman & Chief Exec., Int'l Media Partners; 1993, Deputy Undersecretary of Commerce for Int'l Trade Policy and Dev., Clinton Admin. & Chair, Big Emerging Markets Initiative; Coordinator, Haiti Economic Recovery Initiative, the White House; 1996, Managing Director, Kissinger Associates; currently, Chairman, Chief Executive & Co-Founder, Intellibridge Corp. Adjunct Professor of Int'l Affairs, Columbia University. Advisory Board Member, Johns Hopkins School of Public Health, Member, Council on Foreign Relations. Author of over 150 articles and author/editor of six books on international foreign policy, security and economic themes.

--------------------------------------------------------------------------------

Affiliations

Member, Council on Foreign Relations
Non-Resident Associate, Carnegie Endowment for International Peace
Advisory Group, Center for Global Development

"Globalization looks different when you can tell the pilot when to leave and where to go, and when there are no security lines to wait in when you are heading off for distant destinations. Those who are free to move about the planet this way come to have more in common with themselves than with their own countrymen. "What happened to us, that we walk through the Davos party and know more people than when we were walking across the village green in the town we live in?" wonders Mark Malloch-Brown, former Deputy Secretary General at the United Nations and now a senior official in the British Foreign Ministry. In fact, Davos is a village green for the superclass. It's at such a gathering that leaders get to know one another, hatch deals and exercise perhaps the greatest power the superclass has collectively: to SHAPE CONVENTIONAL WISDOM"

http://blog.foreignpolicy...

"As for the real village of Davos, it's bitterly cold and not at all the glamor capital it might seem to be. Yes, there are lots of big black cars and parties. But the hotels of Davos are bland and ill-suited to the annual Davoisie throngs. This year's digs set a new low for me. The pads in the room still bear the name of the dermatological clinic from which the hotel was once converted (and to which it may return once the big shot Brigadoon fades into the mist once again). You can just imagine the disfiguring disorders that once drew patrons to this establishment, and as you do, you very quickly decide that perhaps it might be the better part of valor to eat somewhere else"

"The current financial crisis is another such example, producing serious questions about the influence of the superclass. Of the world's elites, none has strutted the world stage for the past decade like global investment bankers. Masters of money, they created something new: global markets and a constantly evolving array of securities that were both beyond the reach and the comprehension of regulators. Now, the value of some of the complex investment vehicles they created is PROVING TO BE ILLUSORY"

I keep coming back to that "to manage the bank crisis that brought down bear stearns."

I think he meant to write "to manage the bank crisis that HAD brought down Bear Stearns"

But he didn't.

"to manage the crisis that had brought" is past tense. that would mean managing a crisis after the object "Bear Stearns" was brought down.

But it is "to manage the crisis that brought" In this case, the verb "manage" affects the subject "crisis". "that brought" means the event separted by the time relationship verb "that" occurred after the subject "crisis" was affected by the verb "Managed" .

therefore, the action of bringing down Bear Stearns was a direct result of the management of the crisis.

According to David Rothkopf.

The Panic of 1907

http://en.wikipedia.org/w...

Banking industry leaders, one being J.P. Morgan, threatened by the developing trusts, staged a financial attack on Heinze's Knickerbocker Trust. Their motive was to sway public and congressional opinion against trusts.

To bring relief to the situation, United States Secretary of the Treasury George B. Cortelyou earmarked $35 million of Federal money to quell the storm. Complete ruin of the national economy was averted when J.P. Morgan stepped in to meet the crisis. Morgan organized a team of bank and trust executives. The team redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. Within a few weeks the panic passed, with only minimal effects on the country

Early in 1907, Jacob Schiff of Kuhn, Loeb & Co., in a speech to the New York Chamber of Commerce, warned that "unless we have a central bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history."

In May 1908, Congress passed the Aldrich-Vreeland Act which established the National Monetary Commission to investigate the panic and to propose legislation to regulate banking

In 1913, the National Monetary Commission recommended the adoption of the Federal Reserve Act, which mandated the creation of a central banking system to dampen the effects of future panics.

"Globalization looks different when you can tell the pilot when to leave and where to go"

"...and exercise perhaps the greatest power the superclass has collectively: to shape conventional wisdom."

"As a consequence, the world economy was set for the crisis that is currently unfolding. There was no effective global regulator to keep the system in check, and there was no real voice for the average Joe. The Federal Reserve stepped in to stabilize the burnout of one of these major market makers—even though they have no jurisdiction over investment banks, even though many of those supporting the bailout/buyout were the same who have long clamored for "self-regulation," even though many were the ones who had cited the moral hazard of helping to bail out homeowners and encouraging their bad borrowing behavior. And so you have a financial leadership structure that bails out investment bankers worldwide, but not homeowners.

Some in that leadership are embracing new regulatory proposals mainly because they believe it is the price they must pay to maintain the safety net that was quickly woven together by chairman Bernanke and U.S. Treasury Secretary Paulson (the former CEO of Goldman Sachs, the investment bank that has produced in recent years what is perhaps the most extraordinary list of superclass members).
"

"until the people of the world are more comfortable with creating the kind of strong global governance mechanisms that can contain and regulate many of their activities,"

Treasury Secretary Henry Paulson's proposed sweep of financial regulation would emphasize more control at the federal level, at the expense of state oversight, and consolidate an alphabet soup of existing agencies

Paulson's plan is a recognition that Wall Street has pushed beyond regulators' abilities to keep up with innovation. Asset securitization and other structured finance activities, where the credit crisis was created, didn't exist at the time the federal banking agencies were established decades ago. And since the repeal of Depression-era laws separating risky brokerage activities from consumer deposit safeguarding, Wall Street and major commercial banks have increasingly been competing in trading, stock and bond underwriting, and other risk-taking activities.

The plan is the result of a study Paulson commissioned last June, just before the markets started to implode

In transferring more authority over the markets to the Federal Reserve, the plan tries to close gaps in regulation that helped create the current credit crisis,

No one is saying the system should stay the same, that's for sure. But so far the Bush administration's proposals have stopped short of much stricter, or even permanent, oversight of investment banks

Even Paulson's plan would limit the Fed's oversight of Wall Street firms to times of extreme market stress, when investment banks approach it to borrow money directly, as they are now allowed to do.

Last week, Massachusetts Congressman Barney Frank said Congress should authorize the Fed to act as a risk regulator across the markets. "To the extent that anybody is creating credit, they ought to be subject to the same type of prudential supervision that now applies only to banks," he said.

http://www.newsweek.com/i...

Learn from history