Neil Barofsky, the former regulator tasked with policing banker bailouts in the Bush administration’s Troubled Asset Relief Program (TARP) told talk show host Bill Moyers another major banking crash is now “inevitable” because neither of the political parties have the stomach to end “too big to fail.”
I trust what this man is saying, and I admire his honesty and integrity. He tells us how it is on the inside with the big money players and government. He was frustrated in trying to do the job he was hired to do when so many government officials were telling him not to rock the boat in taking his job too seriously.
Reprinted from The Raw Story. Images selected and added by Ray
“This was the government policy created by the architects, Ben Bernanke who is chair of Federal Reserve, Tim Geithner, who was then the president of the New York Fed before becoming Treasury Secretary, and Hank Paulson,” he explained, describing the Bush administration’s actions during the 2008 economic crisis. “Their solution originally was to further concentrate the industry, to make the too big to fail banks bigger.”
That’s a policy the Obama administration has mostly continued, placing only modest limits on the debt load financial institutions are allowed carry, but neglecting broader reforms like restoring the long-standing firewall between checking and savings accounts and the big banks’ more risky ventures on Wall Street.
It’s not as if there isn’t some support for restoring that firewall either, which effectively lets banks risk their investors’ money while keeping deposits safe from major swings in the markets. It used to be the law, but that law was repealed during the Clinton administration, in legislation created with the help of former Citigroup CEO Sanford I. Weill. In the wake of the crisis, however, Weill admitted in July that the time has come to restore the division between investment and consumer banking, which would essentially ban the “financial supermarket” model he created that’s led to institutions becoming “too big to fail.”
Barofsky added that the consolidation of over-leveraged banks like Merrill Lynch into somewhat more healthy institutions like Bank of America ultimately put the markets on a more dangerous path than the nation’s top financial regulators realize. That’s because “you have institutions now that are just monstrous in size, over $2 trillion in assets by certain measures, close to $4 trillion by other measures,” he said, calling the reality in today’s markets “terrifying.”
“The idea that any of these institutions could ever be allowed to fail is pure fantasy, at this point,” Barofsky lamented.
That’s when Moyers cut right to the chase: “Are you suggesting that we could have another crash?”
“I think it’s inevitable,” he replied.
On a scale of significance and importance to the Future well being of America and the World, this report and Testimony of Mr. Barofsky should be the #1 issue in this election campaign and shouted from the rooftops!
Watching from CanaDa, this American election is an exercise in Fraud, deception and manipulation. It doesn’t really matter who wins the Presidency. For those who think Romney can turn things around in less time than Obama had, think again! Hard Times are ahead.
Mr. Barofsky confirms what most people already suspected. “The rich bankers will sell their souls for a few points of profit.” Jesus chased them out of the Jewish Temple, saying the House of My Father is a House of Prayer for ALL NATIONS and you have made it a Den of thieves. Is there anything new under the Sun?
This honest realism of Mr. Barofshy with his inside experience is so refreshing to see in this election campaign of lies and misleading half-truths. The mainline news media don’t have any Integrity left in investigating and reporting the Truth in my opinion.
And Judgment is turned away backward, and Justice stands afar off: for TRUTH is fallen in the street, and EQUITY cannot enter. Yea, Truth fails; and he that departs from evil makes himself a prey: and the LORD saw it, and it displeased him that there was no Judgment. Isaiah 59
No servant can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. You cannot serve God and money.
The ceaseless expansion of economic exploitation, the engine of global capitalism, has come to an end. The futile and myopic effort to resurrect this expansion—a fallacy embraced by most economists—means that we respond to illusion rather than reality. We invest our efforts into bringing back what is gone forever. This strange twilight moment, in which our experts and systems managers squander resources in attempting to re-create an expanding economic system that is moribund, will inevitably lead to systems collapse. The steady depletion of natural resources, especially fossil fuels, along with the accelerated pace of climate change, will combine with crippling levels of personal and national debt to thrust us into a global depression that will dwarf any in the history of capitalism. And very few of us are prepared.
“Our solution is our problem,” Richard Heinberg, the author of “The End of Growth: Adapting to Our New Economic Reality,” told me when I reached him by phone in California. “Its name is growth. But growth has become uneconomic. We are worse off because of growth. To achieve growth now means mounting debt, more pollution, an accelerated loss of biodiversity and the continued destabilization of the climate. But we are addicted to growth. If there is no growth there are insufficient tax revenues and jobs. If there is no growth existing debt levels become unsustainable. The elites see the current economic crisis as a temporary impediment. They are desperately trying to fix it. But this crisis signals an irreversible change for civilization itself. We cannot prevent it. We can only decide whether we will adapt to it or not.”
Heinberg, a senior fellow at the Post Carbon Institute, argues that we cannot grasp the real state of the global economy by the usual metrics—GDP, unemployment, housing, durable goods, national deficits, personal income and consumer spending—although even these measures point to severe and chronic problems. Rather, he says, we have to examine the structural flaws that sit like time bombs embedded within the economic edifice. U.S. household debt enabled the expansion of consumer spending during the boom years, he says, but consumer debt cannot continue to grow as house prices decline to realistic levels. Toxic assets litter the portfolios of the major banks, presaging another global financial meltdown. The Earth’s natural resources are being exhausted. And climate change, with its extreme weather conditions, is beginning to exact a heavy economic toll on countries, including the United States, through the destruction brought about by droughts, floods, wildfires and loss of crop yields.
Heinberg also highlights what he calls “the highly dysfunctional U.S. political system,” which is paralyzed and hostage to corporate power. It is unable to respond rationally to the crisis or solve “even the most trivial of problems.”
“The government at this point exacerbates nearly every crisis the nation faces,” he said. “Policy decisions do not emerge from deliberations between the public and elected leaders. They arise from unaccountable government agencies and private interest groups. The Republican Party has taken leave of reality. It exists in a hermetically sealed ideasphere where climate change is a hoax and economic problems can be solved by cutting spending and taxes. The Democrats, meanwhile, offer no realistic strategy for coping with the economic unraveling or climate change.”
The collision course is set. It is now only a matter of time and our personal response.
“It could implode in a few weeks, in a few months or maybe in a few years,” Heinberg said, “but unless radical steps are taken to restructure the economy, it will implode. And when it does the financial system will seize up far more dramatically than in 2008. You will go to the bank or the ATM and there will be no money. Food will be scarce and expensive. Unemployment will be rampant. And government services will break down. Living standards will plummet. ‘Austerity’ programs will become more draconian. Economic inequality will widen to create massive gaps between a tiny, oligarchic global elite and the masses. The collapse will also inevitably trigger the kind of instability and unrest, including riots, that we have seen in countries such as Greece. The elites, who understand and deeply fear the possibility of an unraveling, have been pillaging state resources to save their corrupt, insolvent banks, militarize their police forces and rewrite legal codes to criminalize dissent.”
If nations were able to respond rationally to the crisis they could forestall social collapse by reconfiguring their economies away from ceaseless growth and exploitation. It remains possible, at least in the industrialized world, to provide to most citizens the basics—food, water, housing, medical care, employment, education and public safety. This, however, as Heinberg points out, would require a radical reversal of the structures of power. It would necessitate a massive cancellation of debt, along with the slashing of bloated militaries, heavy regulation and restraints placed on the financial sector and high taxes imposed on oligarchic elites and corporations in order to reduce unsustainable levels of inequality. While this economic reconfiguration would not mitigate the effects of climate change and the depletion of natural resources it would create the social stability needed to cope with a new post-growth regime. But Heinberg says he doubts a rational policy is forthcoming. He fears that as deterioration accelerates there will be a greater resolve on the part of the power elite to “cannibalize the resources of society in order to prop up megabanks and military establishments.”
Survival will be determined by localities. Communities will have to create collectives to grow their own food and provide for their security, education, financial systems and self-governance, efforts that Heinberg suspects will “be discouraged and perhaps criminalized by those in authority.” This process of decentralization will, he said, become “the signal economic and social trend of the 21st century.” It will be, in effect, a repudiation of classic economic models such as free enterprise versus the planned economy or Keynesian stimulus versus austerity. The reconfiguration will arise not through ideologies, but through the necessities of survival forced on the poor and former members of the working and middle class who have joined the poor. This will inevitably create conflicts as decentralization weakens the power of the elites and the corporate state.
Joseph Tainter, an archeologist, in his book “The Collapse of Complex Societies” provides a useful blueprint for how such societies unravel. All of history’s major 24 civilizations have collapsed and the patterns are strikingly similar, he writes. The difference this time around is that we will unravel as a planet. Tainter notes that as societies become more complex they inevitably invest greater and greater amounts of diminishing resources in expanding systems of complexity. This proves to be fatal.
“More complex societies are costlier to maintain than simpler ones and require higher support levels per capita,” Tainter writes. The investments required to maintain an overly complex system become too costly, and these investments yield declining returns. The elites, in a desperate effort to maintain their own levels of consumption and preserve the system that empowers them, through repression and austerity measures squeeze the masses harder and harder until the edifice collapses. This collapse leaves behind decentralized, autonomous pockets of human communities.
Heinberg says this is our fate. The quality of our lives will depend on the quality of our communities. If communal structures are strong we will be able to endure. If they are weak we will succumb to the bleakness. It is important that these structures be set in place before the onset of the crisis, he says. This means starting to “know your neighbors.” It means setting up food banks and farmers’ markets. It means establishing a local currency, carpooling, creating clothing exchanges, establishing cooperative housing, growing gardens, raising chickens and buying local. It is the matrix of neighbors, family and friends, Heinberg says, that will provide “our refuge and our opportunity to build anew.”
“The inevitable decline in resources to support societal complexity will generate a centrifugal force,” Heinberg said. “It will break up existing economic and governmental power structures. It will unleash a battle for diminishing resources. This battle will see conflicts erupt between nations and within nations. Localism will soon be our fate. It will also be our strategy for survival. Learning practical skills, becoming more self-sufficient, forming bonds of trust with our neighbors will determine the quality of our lives and the lives of our children.”
When people have to run faster and faster to hold on to where they were, it is time to consider some unorthodox solutions.
How about revisiting the Lord’s prayer? Forgive us our debts as we forgive those indebted to us.
There would be a huge transformation, redeeming Time and Opportunity, if the people decided they would be better off standing up and affirming their own self-interest by implementing this good, old, common sense advice as the Global Biblical Babylonian economic, military, political system has arrived at it’s end as the Bible said it would:
I read in The Jerusalem Post this week, Rabbi Ovadia Yosef, the Shas spiritual leader, called on followers to ask God to wipe out “evil ones who threaten Israel.” The Shas are a part of the Netanyahu Zionist coalition regime in Israel.
This is the second time in a row in which Yosef has spoken about the threat of Iran’s nuclear program during his post-Shabbat Torah lesson.
It follows a briefing he was given by National Security Adviser Yaakov Amidror on the Iranian issue 10 days ago, which was seen as part of an effort from the Prime Minister’s Office to obtain the rabbi’s support for the government’s position on the matter.
Speaking on Saturday night, Yosef talked about the tradition on the Jewish New Year, Rosh Hashana, of eating various fruits and vegetables as positive portents for the year ahead.
“When we make the blessing on the dates that ‘our enemies and haters should be ended’ we should have in mind the Iranian regime, those evil people who threaten Israel,” the rabbi said.
“Do good, God, wipe them out, kill them,” he entreated, to which the assembled crowd answered “amen.”
If this is what Israelis are being indoctrinated with these Days, kiss Peace in the Middle East goodbye and welcome World War III/Armageddon. No Nation on Earth will be immune from the consequences.
It brought to mind this article which appeared in The Jerusalem Post, July 2, 2009. At the Time, I thought it was a significant article on the attitudes within the Israeli Zionist regime by government Ministers. I’m glad I copied and saved it since the original Jerusalem Post link no longer exists.
Those attitudes are even more entrenched among the Zionists in Israel than ever before. Just read the comments to any article inThe Jerusalem Post concerning Palestinians and Iran and you will see an Israeli-centred view of Arabs with whom they must live in Peace in terms, descriptions and characterizations that equal the worst terms the Nazis used to describe Jews in another place and Time. Has the lesson not only been forgotten, but never learned?
So when exactly did we go nuts? With depressing regularity, our leaders say the dumbest, most vile things. And we, the public, look up at this bloated, cacophonous monstrosity of a government and think, “Everything is OK.”
Take our public security minister, for example. This June, while reviewing antidrug operations in southern Tel Aviv, Yitzhak Aharonovitch praised an undercover cop for his grungy appearance, remarking that he looked an “Araboush.” Now for those who don’t speak bigot, Araboush is an anti-Arab epithet on par with, say, Jewboy or Hymie. In any sane Western democracy, an official caught using such language could kiss his career good-bye. But not so here.
When the media called out Aharonovitch for the slur, all he had to do was apologize, then assure us that the comment did not represent his worldview. And we moved on because no one who belongs to Yisrael Beiteinu could possibly be racist, right? I mean, this is the same party that sought to institute loyalty oaths, ban Israeli Arab political factions and prohibit commemoration of the nakba – the defeat and dispossession of the Arab community during the War of Independence.
Avigdor Lieberman, leader of Yisrael Beiteinu, has even suggested disenfranchising Israeli Arabs by handing over their towns to a future Palestine. Oh, and there was that stray comment about bombing the Aswan Dam in Egypt.
Again, in a normal Israel, Lieberman would be left to rant on a soapbox next to the meat-is-murder wackos and the Raelians. But what do we do with such a dangerous demagogue? Make him foreign minister, of course! For the past couple of months, Lieberman has been serving as our voice abroad. Well, sort of. Lieberman is, in fact, so toxic that Defense Minister Ehud Barak and President Shimon Peres have to pick up much of the diplomatic slack.
WHAT’S STRANGE is the fact that few people here seem troubled by this. Maybe it’s because we expect so little of our politicians that nothing shocks us anymore. After all, we do have a housing minister who backs Jim Crow-style segregation.
Lecturing the Israel Bar Association earlier this month, Housing Minister Ariel Attias said that he sees it as his duty to keep Arabs out of Jewish communities in the North. Mixed towns are dangerous, he said: “Look at what happened in Acre.” Yes, let’s look at what happened in Acre. Last Yom Kippur eve, a pack of youths attacked an Arab motorist after he had driven into a mostly Jewish neighborhood. The assault then sparked an intercommunal riot that engulfed the city.
None of this, though, matters to Attias. He doesn’t care about healing wounds; he just wants the Arabs hemmed in and out of sight. And we treat Attias like he only speaks for himself, like what he does is happening on the moon
Of course, not every minister in the government is prejudiced; some are just idiots. A case in point is Transportation Minister Yisrael Katz. He actually thinks that the future of Zion can be secured by changing Arabic place names on highway signs.
Then there is Yossi Peled. This minister-without-portfolio suggests that we boycott US defense contractors and sell arms to nations not on the White House’s BFF list to register our displeasure with Barack Obama’s Mideast policies.
Apparently, Peled wants Israel to risk $3 billion a year in foreign aid, lucrative defense projects with the US and superpower backing at the UN Security Council to keep on building in the settlements.
A sign of still deeper dysfunction, Prime Minister Binyamin Netanyahu recently told the Americans that he’d remove illegal outposts if the US took a harder line on Iran. In other words, Bibi would enforce our own laws only if first paid a political bribe.
NOW, TO be fair, we’ve had crummy ministers before. The Bibi government is just the reductio ad absurdum of our political system – a fractured partyocracy that panders to ideological sectors, not real communities.
See, there’s no such thing as an Israeli citizen. There are just haredi voters, secular voters, Arab voters, etc., and we all vote as if no one else existed in the country. Likewise, the politicians act as if they were responsible to no one but their parties.
Accordingly, the system encourages behavior that borders on madness as even the center must pay homage to the radicals. Indeed, if Netanyahu were to fire Lieberman, Attias and Co., their parties would bring down his government.
The only way to end this farce is through regional representation. By dividing the country into voter districts, we can make each and every Knesset member beholden to the people. A first-past-the-poll system in each district would likewise temper extremist positions as assorted factions would need to band together to win.
Unfortunately, our current crop of “public servants” has no interest in fixing the status quo. So to make a change, we will need to rally from the bottom up. If we don’t, we may wake up one day to find a country not worth defending.
From TheJerusalem Post by Eric Schechter, July 2, 2009 The writer is a freelance military reporter based in Tel Aviv.
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Barofsky, the former regulator tasked with policing banker bailouts in the Bush administration’s Troubled Asset Relief Program (TARP) told talk show host Bill Moyers another major banking crash is now “inevitable” because neither of the political parties have the stomach to end “too big to fail.”
“This was the government policy created by the architects, Ben Bernanke who is chair of Federal Reserve, Tim Geithner, who was then the president of the New York Fed before becoming Treasury Secretary, and Hank Paulson,” he explained, describing the Bush administration’s actions during the 2008 economic crisis. “Their solution originally was to further concentrate the industry, to make the too big to fail banks bigger.”
lets banks risk their investors’ money while keeping deposits safe from major swings in the markets. It used to be the law, but that law was repealed during the Clinton administration, in legislation created with the help of former Citigroup CEO Sanford I. Weill. In the wake of the crisis, however, Weill admitted in July that the time has come to restore the division between investment and consumer banking, which would essentially ban the “financial supermarket” model he created that’s led to institutions becoming “too big to fail.”
Barofsky added that the consolidation of over-leveraged banks like Merrill Lynch into somewhat more healthy institutions like Bank of America ultimately put the markets on a more dangerous path than the nation’s top financial regulators realize. That’s because “you have institutions now that are just monstrous in size, over $2 trillion in assets by certain measures, close to $4 trillion by other measures,” he said, calling the reality in today’s markets “terrifying.”
