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6CDO Citi Crack Whack & Give Codi a Bone (-81kb)

Citigroup: Too Big to Fail?

by William Greider

The fall of Citigroup is a resonant political event–akin to the Republican Party’s failure to win reform of Social Security–only this time the bell tolls for the Democratic Party. The creation of Citigroup as an all-purpose financial supermarket and too-big-to-fail banking marvel was very much the accomplishment of Clinton Democrats. They enacted the law in the late 1990s that authorized this megabank monstrosity, with coaching from Treasury Secretary Robert Rubin, Fed chairman Alan Greenspan and of course Sanford Weill, the creative genius who built Citi.

Now that this institution has slid into deep trouble and Rubin has been appointed emergency chairman to rescue it, Democrats inherit the stink.

  1. Arvy November 6th, 2007 1:25 pm

    “Reforming the deregulated financial system is another test for the new ‘New Democrats.’ I expect it will take them a while–maybe years–to face up to the implications.”

    Oh, for Pete’s sake. ‘New Democrats’ actually facing up to something?! Get real. So-called deregulation is just another word for the brand of ‘freedom and democracy’ (a.k.a ‘The American Way’ (TM) or unbridled ‘free market’ capitalism) that provides the sponsorhip for both parties and is promoted by them in turn, both at home and abroad.

    Here, courtesy of Mike Whitney ( ) is another way of expressing the reality of the situation:

    [quote]The real reason that the subprime swindle mushroomed into an economy-busting monster is that the markets are no longer policed by any agency that believes in intervention. The pervasive “free market” ideology rejects the notion of supervision or oversight, and as a result, the markets have become increasingly opaque and unresponsive to rules that may assure their continued credibility or even their ability to function properly.

    The “supply side” avatars of deregulation have transformed the world’s most vital and prosperous markets into a huckster’s shell-game. All regulatory accountability has vanished along with trillions of dollars in foreign investment. What’s left is a flea-market for dodgy loans, dubious over-leveraged equities and “securitized” Triple A-rated garbage.

    Let’s hear it for the Reagan Revolution.[/quote]

    Now, extrapolate that to the entirety of the system to which the US is inextricably wedded, politically as well as economically, and you may get some small glimpse into the underlying problems of that system. The chickens are coming home to roost — with a vengeance. Better hold on tight. You, unlike the ‘elite’ authors of the situation, are unlikely to find any safe haven to run to, and even they may be in for a few nasty surprises.

  2. Daniel David November 6th, 2007 1:41 pm

    If the Democrats “caused” this mess, as alleged by the author with Bill Clinton evidently signing bad legislation passed though his late-90’s Republican Congress, why didn’t the wiser Bush Republicans just fix it for us when they had both The White House and the Congress?

    The Democrats be stupid, weak, etc., etc., but if we now note that something like Glass-Steagal needs to be re-enacted (due to previous error) it will only be a strong majority of Democrats ever doing it. I mean, do you think Republicans are gonna do it?

  1. NewYorkDana November 6th, 2007 4:25 pm

    I agree with leobixby. We had a perfectly good banking system in place when there was a division between savings banks and commercial banks and what on earth was the purpose in letting banks sell investment instruments? I agree wholeheartedly with leobixby when he says “They have done absolutely NOTHING to make anyone’s life any better, except for the 5% they serve.”

  2. kloro November 6th, 2007 4:32 pm

    when will greider and other authors get it that publishing on paper only is old stuff.

  1. Atexan November 6th, 2007 5:24 pm

    To neumonk,

    Now there is no difference what so ever between the Domocrats and Republicans. They act as duopoly. Both of them are owned and controlled
    by big business/Money.
    Daniel David is nothing but a huckster and a shill for the Democratic party. No matter what is the subject of discussing is, he alway buds in and praises the Democrats?? Sound like a broken record.

  2. blueticket70 November 6th, 2007 5:42 pm

    Skippyagogo, “too big to fail” is a phrase that originated, as far as I know, in the softening-up P.R. period before the taxpayer-funded 1970s Chrysler bailout. The hook was that letting such a huge business fail because of its own mismanagement would unfairly punish thousands of families (as if that were the government’s, let alone Chrysler’s, main concern.)

  1. cruxpuppy November 6th, 2007 7:13 pm

    Mike Whitney has been calling it right along because he understands the simple truth in the esoteric complexity of proliferating new “financial instruments” that Alan Greenspan encouraged….

    ……the financial wizards were not content to get their stuff exploiting the public in the traditional way, there was real money to be made in conning each other.

    You’re a Citibank red suspenders guy who dreams of financial perpetual motion machines, so you create a new class of borrowers by cultivating fields considered fallow back in the days of regulation, the fields of bad risk credit that began to seem miraculously fertile after deregulation. You sell the American dreamers ARMs and other scams. (Greenspan described this as a species of altruism, ie, giving everyone a chance to own a home) Then you take this funky paper and you mix it together with other mortgage debt that doesn’t smell so bad and you label it a “collateralized debt obligation” or CDO.

    You have created a new “instrument”, a “security”, almost as good as a municipal bond, you say, only really sexy. You market these CDO’s to the members of your own class, the only ones who might have some understanding of the nature of the new instrument.

    No one really understood it, of course, least of all Mr. red suspenders MBA, because the money mania is an irrational exuberance based on the “new physics” of the deregulated free market.

    The great maestro, King Lizard himself, speaking ex cathedra before a fawning congress, bestowed his blessing and the entire suspendered class breathed a sigh of relief. If the Greenspan understood it and pronounced it good, then put the peddle to the metal and multiply those CDO’s!

    Meanwhile, Rosie Menendez, who was convinced she would win the lottery by the time her ARM would reset from $600/month to $1200/month, had to move in with her cousin when she did not win the lottery and lost her 3 bdrm house.

    By now, it is becoming apparent to Citibank and the suspendered class that finance is not a world unto itself, that money is just a daydream if it is not linked to genuine productive activity, ie, Rosie Menendez serving you your burger and fries. Money does not actually make money, it never did and never will.

    That is the bullshit the suspendered class mistakes for nourishment, always has and always will until some one shuts down their casino of lies.

    That won’t happen. Greider won’t admit we’ve come to the end of days. He thinks reform when only revolution will suffice.

    He thinks Rosie Menendez and her ilk will bail out the suspendered class because Citibank is too big to fail. Congress will try, but the dollar won’t carry the load. The fact is Citibank is too big to survive. Citibank is the problem. It should be symbolically interred next to Milton Friedman.

  2. PrestonDigitator November 6th, 2007 7:40 pm

    The really BIG story in market news today is that the monolines are officially in total melt down. The monolines insure banks against defaults on all those CDO’s and other derivitives plays and is a TRILLION DOLLAR nightmare. This is a direct link to the take-down of even the municipal bond sector. This is a breach of 3rd line defenses and the best (Worst) indicator yet of the magnitude of the US AND GLOBAL economic melt down.
    I’d also like to take this opportunity to officially announce that: Allen Greenspan is the Paraclete of MAMMON*ography.

  3. PrestonDigitator November 6th, 2007 8:23 pm

    .../.... Then you may, (or may not) hear about the megolithically sacrosanct*est of them all, Mellon bank of New York, with it’s 20 trillion dollar asset line being attack as if by Parana.

  4. PrestonDigitator November 6th, 2007 8:39 pm

    One exception to J.P. Morgan Chase’s doomed future is this: J.P. Morgan Chase controls the gold market. Today, the value of one ounce of gold hit $850. If you, some day soon, see that the gold market has, for some trumped-up reason, just taken a big, out-of-the-blue hit, loosing say 2 to 2.5%, you’ll know that J.P. has just “skimmed” that market and retired that corresponding amount of debt off of it’s derivitives losses. just watch!!!!

  5. cruxpuppy November 6th, 2007 9:35 pm

    And isn’t it funny, Preston Digitator, that it was JP Morgan, iconic facsimile of the incorporation of the US, who with his cronies, engineered the Federal Reserve, and that this Frankenstein has turned on its creator by manipulating this global economic debacle into being? It’s ironic. These fools never seem to consider that self-interest and the common good are actually one and the same and that the survival of the fittest depends upon the survival of the weakest, otherwise who will the fittest have for lunch?

    Do you really think JP Morgan Chase has enough gold to cover its losses?

    Personally, I think these mavens are quietly planning a switch to the Amero. They wrecked the dollar and are set to kick it aside onto the ash heap of history. There ain’t going to be no stinking reform! When the national casinos go bust, go global!

  6. AlexLawyer November 6th, 2007 9:58 pm

    Not to worry. Bob Rubin will show up on Hillary Clinton’s doorstep, hat in hand and political contributions at the ready, and a bailout will be orchestrated. It’s all being choreographed now.

  7. PrestonDigitator November 6th, 2007 10:15 pm

    All good points CP. The biblical line about “what so ever you do to the least of these” has never seemed more prescient than today and in regards to this terribly flawed gaggle of auspicious buffoons. Do these mega-banks really believe (especially at this stage of the melt-down) that hiding their losses will stop the implosion in its tracks???That’s one thing that has always fed my sardonic distain for any and all official-dum(b), and that is when they go to such juvenile lengths to cover their incompetence and just add to the consequences in every way, especially in magnifying their stupidity and woeful failure to achieve even a modicum of maturity……wtf, is that one of the qualifications for “my service to the Public”? The idea of the Amero is intriguing, but I don’t think this is all part of that grand-wizzards-behind the curtain scheme….not at this time. It may have been planned as the end game if the house of crap economy had held together to it’s planned conclusion….for credibly hoisting the US to Empire status by such masterful economic brilliance. But alas, when we have technicians trying to pass themselves off as true craftsmen of world fiscal policy….you get a mountain of smoldering dung….and that will be the way the rest of the world accords us now….and rightfully so. This should doom any further delusions of Empiric grandeur for ohhhh, say 3 generations……if anyone is still around.

  8. cruxpuppy November 6th, 2007 10:51 pm

    I dunno, Preston D, the Europeans got to the euro because they were sick of nationalism and wanted to compete, but we may get to the amero because we have to and expand our national identity by devouring weaker neighbors in the process. The US is itself too big to fail and the worthless dollar is supported internationally by virtue of that fact. If it can no longer dollarize ME oil, it can amerize Canadian and Mexican oil, of which there is a sufficiency. It is not so much the vain grandiosity of “true craftsmen of world fiscal policy” as it is the ad hoc decisions of a powerful thug. Rome lasted quite some time with powerful thugs at the helm making it up as they went along… It is not beautiful thoughts ringing with the pure tones of reason, but ugly deeds that put thuggery on center stage…the amero is not quantum physics…Al Capone would have understood it perfectly.

  9. PrestonDigitator November 6th, 2007 11:14 pm

    DanielDavid, you asked “and who would be willing to possibly do it.?”

    I truly believe Kucinich is the only candidate that can pull the world out of it’s pending doom. I truly believe that his grasp and respect for the constitution and it’s inherent demands to run this country by upholding the law…..THE PEOPLES LAW, is seriously our last chance at correction. He’s no superman in any respect…… he just happened to latch onto, and inculcate the validity of what is the essential core of what makes America, America… mystery, no magic, no need for slight of hand, smoke, mirrors, deception…..just simply UPHOLD THE CONSTITUTION. In so doing, he is comfortable with any and all contingencies, feel no threat, no intimidation, no delusions, and can easily project that comfort in his convictions. What does it say about how far we, as a nation have strayed from what made us who we are, when the only guy who truly GETS IT, is treated as an outsider??????

  1. simonhhh November 7th, 2007 11:11 am

    PrestonDigitator November 6th, 2007 7:40 “…monolines are officially in total melt down. The monolines insure banks against defaults on all those CDO’s and other derivatives plays and is a TRILLION DOLLAR nightmare…”

    Actually, a 471 trillion dollar nightmare..the real size of the world financial derivatives market…mostly unhedged and exposed either way long or short…Warren Buffet and Addison Wiggin have been warning about this explosive cocktail for years…

    With the US dollar in the toilet, Gold at $840 and Oil bumping it’s head on $100 all bad nasty little Economic Policies [SIC] of Bu$hco and his merry band on incompetents are COMING HOME TO ROOST BIG TIME…

    PS: One clue to this disaster; War expenditures are ultimately destructive to any economy in the LONG TERM..something Bu$h failed to study, understand or comprehend at university….Perhaps he was too busy getting pissed up and drugged out…

  2. PrestonDigitator November 7th, 2007 5:04 pm

    All good input mat,jxh,&simon, Hey didn’t any of yoz guyz like that title,”Paraclete of MAMMON*ography’? I had to sit on that for 36 hours, burning a whole in my pocket, before I had an applicable chance to use it. lol. Oh, and did you notice that Tuesday the market jumped up 137 points based on mostly bad fundamentals?? The market-wizard-behind-the-curtain always gets news 12 to 24 hours before we do, and jacks up the market, knowing that the next day, it’ll have to go down……it’s done so consistently that it’s become a given. gdbarnacles.

  3. RSJ November 8th, 2007 6:31 am

    Similar to the unsuccessful parasite that kills its host — as opposed to the successful parasite which works to help the host stay alive, thereby prolonging its own life — large international corporations have reached the point where they are a pernicious infection, a flesh-eating bacteria that is killing the greatest consumer market the world has ever seen, the United States. By failing repeatedly to help the host sustain financial health by exporting its jobs, poisoning its environment, devaluing its dollar, lowering its tax base, and selling unregulated nearly-useless investment instruments to its public, they are assuring an economic collapse of Great Depression proportions, one that will sweep most of them under in its wake.

    Some of the more giddy ‘free marketeers’ are pursuing this comic formula: Asia and the Pacific Rim nations will soon develop economically to the point where they can absorb the billions of dollars of electronic toys, luxury cars, light trucks, overpriced homes, and other pricey paraphernalia that are a hallmark of the modern American consumer. That’s just plain crazy. With even the highest-paid Indians and Chinese earning only about $30-40K per annum, versus their American cousins who were pulling down $70,000 to $100,000 for the same work, it’s going to be generations before those societies will be able to afford the lifestyle of the average middle-class American.

    In the meantime, the biggest losers in this game, aside from America and Europe, will be the large multi-national corporations who became so mindlessly aggressive in their lust for profits that they murdered their host.

    As I’ve posted on other threads at Common Dreams, the only ‘up’ side of the national economic collapse I’m convinced is coming before the next election — a depression worse than the 1930s — is that it will provide a strong antibiotic to rid us of the worst of the overgrown and unfriendly corporate parasites that have been leeching the life blood from our system. As in the 1930s, Congress will be forced to reimpose tight regulations on the corprocracy and the investment classes, if they want to stay in office — if they even hope to have a stable country to represent.

    In the aftermath, the only evidence of the existence of Citigroup and its ilk will be displayed in museums, right next to the Tyrannosaurus Rex bones, another voracious predator rendered extinct by a sudden change in the climate.

    “You market these CDO’s to the members of your own class, the only ones who might have some understanding of the nature of the new instrument.”

    Cruxpuppy, while I agree with most of your analysis, this point is not quite accurate; CDO’s and other similar shaky ‘high-yield’ investment paper were invented to be pitched to dentists in Dubuque, nurses in Wichita, retirees in Pompano Beach, and small business owners in Scottsdale, as well as to pension funds — people with get-rich-quick dollar signs in their eyes blocking their common sense. The Wall Street savvy wouldn’t touch this tainted stuff; it was hyped to bring in bucks from the gullible and not-well-informed small and mid-level investor, the Chuck Schwab-Etrade crowd. If you’ve seen the film “Boiler Room” you have an idea of what I mean.

    Arvy, thanks for the Mike Whitney link; as you say, he’s been prescient over the years and, if our government had any brains, rational thinkers such as Whitney would be making economic policy rather than wealthy ‘free market’ blowhards like Alan Greenspan and Ben Bernanke.

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The Western Appetite for Biofuels Is Causing Starvation in the Poor World
Developing nations are being pushed to grow crops for ethanol, rather than food - all thanks to political expediency

by George Monbiot

Some War Protestors Jailed; Others Set Free

by Ryan Grim

As Desiree Fairooz sat with her Code Pink colleagues waiting for lawmakers and Secretary of State Condoleezza Rice to arrive for a recent House committee hearing, she had no plans, she said, to get arrested. “I already had a case pending.”

But she couldn’t resist the opportunity when Rice walked in nearly unguarded, and she rushed the Cabinet member with fake blood on her hands. As Fairooz was being hauled from the room, Capitol Police arrested two other women who’d been sitting near her but hadn’t done anything yet.

You can see a video of the October 24th event here.
The image “” cannot be displayed, because it contains errors.

One of the enduring images of Capitol Hill culture is the anguished protester being hustled by authorities out of a congressional hearing room, often hurling insults at scowling lawmakers as they leave. But this familiar scene is shrouded by a couple of Washington mysteries: What triggers an arrest? And what happens next when someone gets busted?

As it happens, there’s no simple answer to either question. Capitol Police say they give wide discretion to individual officers on whether an evicted protestor gets arrested.  [or their leg broken...etc / js zog]

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