There's phrase that's worked
its way into the Japanese language: "Lehman Shokku" - translated
as Lehman Shock. It refers to what happened to 460,000 people
after Hank Paulson and Tim Geithner let the global Lehman Investment
Bank collapse. A former Lehman executive told me over Matzoh at a Passover
seder that she believes the decision reflected a competitive conflict
and ego battle between the former Goldman Sachs chief turned Treasury
Secretary and the bullheaded CEO of Lehman.
The clash of two power-crats
in New York triggered a hard rain across the world.
Bloomberg reports on a forty
year old former bank employee, Miki, who "now sleeps in cardboard
boxes under the elevated Hanshin expressway in Umeda, Osaka's central business district...as
the global recession triggered by the implosion of Wall Street banks
batters Japan. ... Miki's loss of housing shows how Japan's 2.95
million unemployed people threaten to fuel a rise in homelessness."
Bloomberg is doing more than
reporting bad news; it is also suing the Federal Reserve Bank for information
that the privately run "public institution" wants to hide. Bloomberg
wants the FED to disclose securities the central bank is accepting on
behalf of American taxpayers as collateral for $1.5 trillion of loans
As the sun creeps through and
the weather warms, there's an expectation that the new season will
wipe out the winter's bad karma and lead to a desperately needed economic
recovery. Obama Advisor Larry Summers, like an evangelist from the Elmer
Granty era, sees the signs in small upticks of business activity. Now,
according to the News n Economic blog comes an analyst, Roger Shealy,
who has examined the footnotes and available data concluding "The
Fed is holding a larger share of risky assets as collateral for its
riskless currency and Treasuries lent on the open market."
Translation: We are living
The Fed also admits that its
consumer credit plan is faltering. Reports TIME:
"The second round of
the Federal Reserve's attempt to restart the nonbank consumer-lending
market, the so-called TALF program, went even worse than the faltering
first round did last month. The poor performance is causing some Fed
officials to doubt the entire premise of the effort to restart nonbank
On top of that, as the Treasury
Department runs so-called "stress tests on the soundness of the banks,"
the Fed wants the banks to stay silent on the results. Again, Fed watcher
Bloomberg is on the case: "The U.S. Federal Reserve has told Goldman Sachs Group
Inc., Citigroup Inc. and other banks to keep mum on the
results of "stress tests" that will gauge their ability to weather
the recession, people familiar with the matter said."
On this Easter weekend of "He
Has Risen," a lot seems to be still falling.
For the most cogent explanation
of what's going on, visit the Baseline Scenario website run by former
IMF exec and MIT Professor Simon Jenkins:
global financial liberalization created the potential for capital to
move violently across countries and greatly facilitated speculative
attacks on currencies, so financial deregulation within the United States
has made it possible for capital markets to attack - or, in less colorful
terms, go short or place massive negative bets on - the credit of big
banks and, in the latest developments, the ability of the government
to bailout/rescue banks.
The latest credit default
for the largest banks show a speculative run underway. As the system
stabilizes, it becomes more plausible that a single big bank will fail
or be rescued in a way that involves large losses for creditors. This
would like trigger further speculative attacks on other banks, much
as the shorting of countries' obligations spread
from Thailand to Indonesia/Malaysia and then to Korea in fall 1997."
In other words,
them chickens will soon be coming home to roost.
The banks seem
confident that having learned the disastrous lessons on Lehman Shokku
the government will keep bailing them out. Quiet as its kept, Insolvency
in many banks suggests another wave of bailouts is coming.
The banks seem
confident that they have "captured" the government and can depend
on taxpayer monies to pay off their crimes and mistakes. At the same
time, they are worried about something else: US.
JP Morgan Chase
overlord Jamie Dimon fears that the public anger will torpedo the schemes
the banks are running, saying, '"if you let them vilify us too much,
the economic recovery will be greatly delayed."
vs. the pitchforks" idea fundamentally misconstrues the current debate.
This is not about angry left or right against the center. It's about
centrist technocrat (close to current big finance) vs. centrist technocrat
(suspicious of big finance; economists, lawyers, nonfinancial business,
and - most interestingly - current/former finance, other than the biggest
of the big, particularly people with experience in emerging markets.)"
this seems the time to get the pitchforks going, to intensify the pressure,
to make noise and press for change. Paul Krugman tells us that the policy
world and the bankers want to rebuild a corrupt system, writing:
everything that has happened, most people in positions of power still
associate fancy finance with economic progress. Can they be persuaded
otherwise? Will we find the will to pursue serious financial reform?
If not, the current crisis won't be a one-time event; it will be the
shape of things to come."
That's why events like this
weekend's banking protests organized by a new force, A NEW WAY FORWARD,
is crucial. Their
three-word phrase, NATIONALIZE, REORGANIZE and DECENTRALIZE sums up the
aims spelled out at ANewWay.org
They have issued
to Break Up the Banks: Tell Obama and Congress, "If it's too big
to fail, it's too big to exist.
the power of the financial elite and make policies that keep a new crop
from springing up.
- We want
our economy and politics restored for the public."
If the protests
fail along with the banks, you can bet, the pitchforks will be back.
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