Financial Elite Have No Shame



Let’s imagine, for a moment, how different the public debate would be today if it had been unions that had caused the current economic turmoil.

In other words, try to imagine a scenario in which union leaders – not financial managers – were the ones whose reckless behaviour had driven a number of Wall Street firms into bankruptcy and in the process triggered a worldwide recession.

Needless to say, it’s hard to imagine a labour leader being appointed to oversee a bailout of unions the way former Goldman Sachs CEO Henry Paulson was put in charge of supervising the $700 billion bailout of his former Wall Street colleagues.

My point is simply to note how odd it is that the financial community has emerged so unscathed, despite its central role in the collapse that has brought havoc to the world economy.

Of course, not all members of the financial community were involved in Wall Street’s wildly irresponsible practices of bundling mortgages into securities and trading credit default swaps. But the financial community as a whole, on both sides of the border, certainly pushed hard to put in place an agenda of small government, in which financial markets largely regulated themselves and citizens (particularly high-income investors) would be spared the burden of paying much tax.

The agenda advanced much further in the U.S., but had an impact in Canada, particularly on the tax front.

One would think that those who pushed this agenda so enthusiastically would, at the very least, be a tad embarrassed today.

But so influential are those in the financial elite – and their hangers-on in think-tanks and economics departments – that they continue to appear on our TV screens, confidently providing us with economic advice, as if they’d played no role whatsoever in shaping our economic system for the past quarter century.

Of course, we’re told there’s been a major change in their thinking, in that many of them are now willing to accept large deficits in today’s federal budget, in the name of stimulating the economy.

While this does seem like a sharp departure from the deficit hysteria of the 1990s, a closer look reveals the change may not be that significant.

In fact, financial types have always accepted deficits – when they liked the cause. Hence their lack of protest over George W. Bush’s enormous deficits, which were caused by his large tax cuts for the rich and his extravagant foreign wars.

What they don’t like is governments going into deficit to help ordinary citizens – either by creating jobs or providing much unemployment relief.

So the Canadian financial community has been urging that the stimulus package consist mostly of income tax cuts – even though direct government spending would provide much more stimulus and do more to help the neediest.

If the Harper government follows the financial community’s advice, we will simply move further along with the small government revolution launched by Ronald Reagan in the early 1980s.

Of course, tax cuts are not the same as financial deregulation. But they are twin prongs of a bundled package aimed at reducing the power of government to operate in the public interest.

Surely it’s time to rethink this resistance to government acting as an agent of the common good.

And maybe it’s time for a little humility on the part of a financial elite that long has enjoyed such deference while turning out to be so spectacularly inept.




Wall Street

Wall Street

Among the economic fields in which Jews today are especially visible is investment banking — “Wall Street,” including interconnected networks of lawyers and other legal and economic manipulators stretching deeply into Hollywood and the mass media. Since the 1800s the “Old Crowd” of German-Jewish banking families (the Seligmans, Lehmans, Goldmans, Sachs, Warburgs, Schiffs, Loebs, et al) had predominated the field; a “New Crowd” of Jews has in recent decades taken their place. After World War II, melodramatically note Judith Ehrlich and Barry Rehfeld, “economic power in America and Wall Street was shifting … Fresh faces came forward as if answering a call … They were the children and grandchildren of Italian, Irish, Poles, and other Europeans who were not of Anglo-Saxon ancestry. But most of all they were Jews.” [EHRLICH, p. 12] This is not to suggest of course that the seminal Jewish American investment firms are today inconsequential. Far from it. In 1999, for instance, Goldman, Sachs and Co. stretched across the world to become the “single largest and controlling shareholder of South Korea’s largest bank, Kookmin. [BLOOMBERG NEWS, p. 11]

“In the world of high finance,” observed Gerald Krefetz, “Jewish interest is concerned with investment banking, a broad catchall for activities ranging from tendering advice to underwriting securities. The heart of investment banking is public offerings and private placements, the risking of capital — sometimes ones’ own, but more often other peoples’ — to finance new companies, or expand old ones.” [KREFETZ, p. 54] The nature of Wall Street entrepreneurship might well be presumed in the title of a 1986 volume by Ken Auletta: Greed and Glory on Wall Street: the Fall of the House of Lehman, or Martin Meyer’s Nightmare on Wall Street: Salomon Brothers and the Corruption of the Marketplace (1993). Both Lehman and Solomon are Jewish-founded firms.

A French Jewish commentator, Bernard Lazare, noted Jewish propensities in high finance in the late 1800s:

“The man of the lower middle class, the small tradesman at whom
speculation has probably ruined has much clearer ideas of why he
is an anti-Semite. He knows that reckless speculation [by financiers],
with its attendant panics, has been his bane, and for him, the most
formidable jugglers of capital, the most dangerous speculators, are the
Jews; which, indeed, is very true.” [LAZARE, B., p. 173]

Finance, investment banking, brokerage, and commodities are the speediest ways (short of outright crime) to get rich in America; by 1988 the stock and bond market and linked economic activities totaled 12 trillion dollars a year (six times the value of the assets of Fortune’s top 500 companies). “Where the money went,” note Ehrlich and Rehfeld, “and what happened to it were greatly influenced by Wall Street power brokers.” [EHRLICH, p. 19] Corporate mergers, acquisitions, and takeovers have become an especially lucrative field. “By the 1980s, says Ehrlich and Rehfeld, “along with [Gentile] T. Boone Pickens, and a few others … the [Jewish] New Crowd was at the very core of the mergers and acquisitions field.” [EHRLICH, p. 15]…. [This circle of money men] bought luxurious homes, expensive art, high-priced foreign cars, designer clothes and jewelry; they hosted or appeared at the right parties.” [EHRLICH, p. 16] … The old WASP establishment had seen its wealth eroded by changing tax laws and inflation … arriviste Jews began to appear on the boards of such time-honored WASP institutions as the Museum of Art, the Metropolitan Opera, and the New York Public Library.” [EHRLICH, p. 5] … The New Crowd broke the stranglehold of the Establishment WASP bankers and [older Jewish] Our Crowd competitors … and extended profit centers to newer financial activities such as block trading, risk arbitrage, a wide range of retail securities products, financial futures, listed trading of options, and junk bond financing that helped companies expand and made almost every company vulnerable to a takeover, a leveraged buyout that restructured corporate entities and raised critical debt levels.” [EHRLICH, p. 394]

In the 1970s, “hostile turnovers,” notes James Stewart, “bore an unsavory taint. They generated bad feelings, especially toward those who represented the attackers. This sometimes alienated other clients. Much of the WASP investment banks and loan firms preferred to leave such work to the other firms, many of them Jewish.” [STEWART, p. 25] “Various techniques and instruments were used in the Wall Street boom of the 1980s,” says Norman Cantor, “but the most consequential — and lucrative was the floating ‘junk’ (low grade) bond to provide capital for involuntary takeovers of one company by another … Fiscal critic Benjamin Stein [sees] the junk bond device as a huge fraudulent Ponzi scheme generating temporary money pools that could be looted by ruthless investment bankers and corporate executives and their overcompensated lawyers.” [CANTOR, p. 402]

William Leach traces the influence that those in investment banking have had in shaping America, both economically and in influencing the nation’s values:

“The growth of investment banking and mass consumption industries
were (and still are) closely related developments … Bankers assisted in
undermining the competitive ethos by directing business interest toward
concentration and easy economic fixers. They helped local monopolies
become major national ‘players’ almost instantaneously. Banker-inspired
megalomania reinforces an already clear pattern in the economy away from
‘making goods’ to ‘making money.'” [LEACH, p. 275]

There is a long list of Jewish entrepreneurs on Wall Street who, as a group, have been influential in literally changing the American economic system. Sanford I. Weill, for instance, “amassed a brokerage empire and eventually became President of American Express;” he was later “recognized as one of the most powerful Jewish businessmen in the nation.” [EHRLICH, p. 13] John Gutfreund rose to become the chairman of Solomon, Inc., “one of the most powerful securities firms in the western world.” Felix Rohatyn “perhaps more than any other, was linked with the flood of massive corporate combinations that reshaped American business for much of the past three decades.” [EHRLICH, p. 14] Sanford C. Bernstein & Co., valued at around $3.5 billion and with assets of $90 billion, is “one of the biggest closely held U.S. money managers.” It manages $55 billion “for institutions, such as pension funds, endowments and foundations, and $35 billion for wealthy individuals.” [BLOOMBERG NEWS, INTL HERALD, p. 10]

Other influential Jewish Wall Street ‘players’ (financiers, lenders, borrowers, advisers, lawyers, et al) in recent years have included Alan Greenberg, Ira Harris, Bruce Wasserstein, Jerome Kohlberg, Henry Kravis, Peter Cohen, Joseph Flom, Martin Lipton, Victor Posner (“a onetime Baltimore slumlord” [FORBES, p. 45] who was indicted in 1982 for $1.25 million in income tax evasion and filing false tax returns [BRENNER, p. 72]), [Posner is “the flamboyantly wealthy Miami Beach financier [who has] been discredited as one of the most unprincipled and destructive modern corporate raiders.” [BIANCO, A., 1991, p. 31], Nelson Peltz, the Belzbergs, and many others. Alan Greenberg is the head of Bear Stearns, Stephen Schwarzman founded the Blackstone Group, a prominent investing firm. Well-known traditional Jewish investment banking houses include Lehman Brothers, Lazard Freres, Goldman Sachs, Salomon Brothers, Bache & Co., and Cantor/Fitzgerald. [SILBIGER, S., 2000, p. 78-79] “Jews took the lead in the ’60s,” notes Jewish business author Steven Silbiger, “with new investment banking techniques that helped introduce a conglomeration craze by using multipurpose holding companies … The concentration of Jewish-owned securities firms created well-paying employment opportunities at all levels of the securities industry: securities analysts; portfolio managers; and stock, bond and futures traders; brokers and deal-makers. Among the equity holders of the Jewish investment banking and trading firms on Wall Street are hundreds of Jewish millionaires. Upward mobility based on merit and high salaries has made working on Wall Street a Jewish-friendly career choice … Although exact figures for the numbers of Jews are not available, they no doubt have a leading and disproportionate role on Wall Street.” [SILBIGER, S., 2000, p. 78-80]

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The Idiots Who Rule America

Our oligarchic class is incompetent at governing, managing the economy, coping with natural disasters, educating our young, handling foreign affairs, providing basic services like health care and safeguarding individual rights. That it is still in power, and will remain in power after this election, is a testament to our inability to separate illusion from reality. We still believe in “the experts.” They still believe in themselves. They are clustered like flies swarming around John McCain and Barack Obama. It is only when these elites are exposed as incompetent parasites and dethroned that we will have any hope of restoring social, economic and political order.

“Their inability to see the human as anything more than interest driven made it impossible for them to imagine an actively organized pool of disinterest called the public good,” said the Canadian philosopher John Ralston Saul, whose books “The Unconscious Civilization” and “Voltaire’s Bastards” excoriates our oligarchic elites. “It is as if the Industrial Revolution had caused a severe mental trauma, one that still reaches out and extinguishes the memory of certain people. For them, modern history begins from a big explosion—the Industrial Revolution. This is a standard ideological approach: a star crosses the sky, a meteor explodes, and history begins anew.”

Our elites—the ones in Congress, the ones on Wall Street and the ones being produced at prestigious universities and business schools—do not have the capacity to fix our financial mess. Indeed, they will make it worse. They have no concept, thanks to the educations they have received, of the common good. They are stunted, timid and uncreative bureaucrats who are trained to carry out systems management. They see only piecemeal solutions which will satisfy the corporate structure. They are about numbers, profits and personal advancement. They are as able to deny gravely ill people medical coverage to increase company profits as they are able to use taxpayer dollars to peddle costly weapons systems to blood-soaked dictatorships. The human consequences never figure into their balance sheets. The democratic system, they think, is a secondary product of the free market. And they slavishly serve the market.

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The American Triangle of Depression

Stock Market

Stock Market

Ten months ago (January 18th, 2008) Henry Paulson, the American Secretary of the Treasury, announced that in the long run the economical structure of America is solid and that he believes that the economy will grow. Official members of George W. Bush’s government, for instance the Chair of the Federal Reserve, did not say anything about the downfall of the American economy. Two months later (March 16th, 2008) the Secretary of the Treasury repeated his reliance on the American economy and emphasized that he has complete trust of the American financial institutions and that the American marketplace can resist difficulty.

Four weeks before the American economic sun set, people woke up from their slumber and heard that huge and old American banks, American financial institutions, and American insurance agencies went bankrupt. The news of America’s financial crisis and bank crises hit like a bomb and shook the world’s financial system for a few minutes. The American stock market fell 40 percent and the stocks of large stock markets in the world fell dramatically. The week that world leaders, for instance Dr. Ahmadinejad, the president of the Islamic Republic of Iran, were in New York attending the annual session of the United Nations, the American Secretary of the Treasury, who was the managing director of a huge American financial institute – Goldman Sachs on Wall Street – put forth tireless effort to confirm George Bush’s 700 billion dollar plan in the congress in order to prevent the complete fall of the American banking system which the American economy has not seen since the time of the previous president Franklin Rosevelt, in the 1930s.

This financial crisis and bankruptcy of United States banks was not astonishing for people who read the analyses regarding America and the events of the world in the Kayhan Newspaper. Exactly ten months ago (January 31st, 2008) when Henry Paulson, the Secretary of the Treasury reported about a healthy American economy, the Kayhan Newspaper predicted an American financial crisis in an article titled Depression in America. I wrote there that this country is practically in an economic crisis. The first paragraph of that article was started with: “The depression has started in America, but the government and treasury department have yet to announce it. There is has always been a three to six month gap between an economical event and its official announcement in the history of the American economy. The depression of 2008, which we are still in, is not an exception to this rule. News regarding the depression must be given gradually and slowly because the modern economy has a direct connection with people’s imagination and trust. America has the largest economy in the world and in the age of internationalizing capital, work, and technology any change in the financial and banking areas of America will have a large effect on the international economy.” This has happened.

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