Governments On Both Sides of the Atlantic Try to Put Lipstick on a Pig
Update: The Fed appears to have known about the Libor manipulation as well.
We noted yesterday that the big banks have criminally conspired since 2005 to rig $800 trillion dollar Libor-based market.
Barclay’s chairman says that the Bank of England gave explicit approval for the manipulation.
A former Barclay’s executive – who was close to the Libor-setting manipulation – told the Daily Mail that Barclay’s manipulated Libor to make the bank look healthier than it really was, and , and the cover-up led to a slow policy response which prolonged the financial crisis.
This appears to be very similar to what happened in America. As I noted last year:
The Tarp Inspector General has said that [then-Secretary of the Treasury Hank] Paulson misrepresented the big banks’ health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.
(Paulson also threatened martial law if Tarp was not passed.)
As we reported last year:
[All of the big banks were] insolvent in the 1980s, but the government made a concerted decision to cover that up.
Financial writers such as Mish and Reggie Middleton pointed out in late 2007 and early 2008 that B of A was again insolvent.
Nouriel Roubini noted in January 2009 that the entire U.S. banking system is “bankrupt” and “effectively insolvent”:
“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion.”
***
“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”
Indeed, the American government’s zero interest rate policy is very much like the British Libor manipulation scandal … it’s nothing but an attempt to breathe life back into the insolvent banks, at the expense of the taxpayer. And see this.
And the “financial reform” laws passed in the wake of the crisis have, in some ways, actually weakened regulations of the financial markets, allowed the big banks to get a lot bigger, and have intentionally allowed fraudulent accounting (and see this).
Likewise, the “stress tests” in both Europe and America have been a total scam … a naked attempt to put lipstick on a pig to cover up the fact that the big banks are insolvent.
By choosing the big banks over the little guy – and failing to rein in the fraud which caused the crisis in the first place – the governments on both sides of that Atlantic are dooming both the financial system and the people to failure.
Category: Think Tank
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As we saw with Watergate, conspiracy to cover up fails in the end. Senator Sam Ervin at the Watergate hearings said: “Be not deceived; God is not mocked; for whatsoever a man soweth, that shall he also reap.”
” When, therefore, there was wrong-doing, bugging, deception, and the misuse of power, it had to be covered up, for no government can govern if trust is lost—the moral law. And then, of course, they had to cover up the cover-up, and then cover up the cover-up of the cover-up. “Oh, what a tangled web we weave, when first we practice to deceive.”
Government is weakened because trust is weakened, for the average man says quite reasonably, “If they have done this and that, what else have they done?” It’s the old story of the grandfather’s clock that struck 13. Not only was the last note absurd, but it cast doubt on all the other notes.
This is what Senator Sam Ervin meant when he quoted the seventh verse of the sixth chapter of Galatians: “Be not deceived; God is not mocked; for whatsoever a man soweth, that shall he also reap.” He was saying with Paul that God is no weakly benevolent and sentimental grandpappy who does not particularly care about human evil. No, He so rules His world that subtly and sometimes slowly, and often obviously, a man reaps what he sows. We do not make a fool of God, who creates and destroys, who judges men and nations.
One witness spoke of “The unbearable qualms of conscience,” and we can easily imagine the sleepless nights of some of the people involved. Subtly and inwardly we reap what we plant.”
http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=1973&month=11