Max Keiser on Bankers Bonuses Face Off – 27 March 2009

18 Comments

1. The Wall Street Journal Future of Finance Initiative principles describe a protocol for insiders, by insiders who are part of the cabal that created the problem in the first place. More of the “foxes guarding the henhouse” collective wisdom designed to protect the interests of big money and continue the game as usual.

   There will be no end to the boom and bust cycle until gains from speculation in land are taxed away by the state.

2. Sorry it took this long to find the site:

   A Call to Action
   Here are the top 20 principles for rebuilding the financial system,
   as developed by participants in The Wall Street Journal Future of Finance Initiative.
   1 STRENGTHEN UNDERWRITING STANDARDS
   Bank management and bank examiners must
   enforce the banks’ minimum underwriting standards,
   focused on the borrowers’ ability to repay
   debt from income. Extend supervisors’ authority
   beyond banks to mortgage brokers and other
   bank agents. Ensure national real-estate appraisal
   standards.
   2 BOLSTER FDIC
   Bolster the Federal Deposit Insurance Corp.
   and provide it with additional funds and flexibility
   so there is capacity to handle escalating bank
   failures.
   3 REGULATORY OVERHAUL
   Streamline the regulatory architecture so there
   is more effective and consistent regulation across
   financial services and an end to regulatory arbitrage.
   Improve effectiveness of regulators. Provide
   them with better training, pay, status and resources.
   Specific industry experience desirable. Testing,
   licensing and continuing education required.
   4 CREATE A NEW CLEARINGHOUSE
   Create a clearinghouse to enhance transparency
   for standardized credit-default-swap contracts,
   including individual corporate names and
   indexes. The clearinghouse would also extend to
   overnight financing and interest-rate swaps.
   5 RAISE CAPITAL REQUIREMENTS
   Writers of credit-default swaps should face
   higher capital (reserve or margin) requirements.
   Banks heavily involved in the CDS market should
   face a further surcharge for concentration risk.
   6 ENHANCE COLLATERAL
   Enhance collateral requirements on over-thecounter
   derivatives to protect the system. To minimize
   the effects of financial-institution failure,
   regulators should segregate customer collateral in
   the event of a bankruptcy by a firm involved in
   the credit-default-swap market.
   7 SMARTER SECURITIZATION
   Improve disclosure in securitization, improve
   underwriting standards, require all parties in the
   process to have “skin in the game.” Create meaningful
   standards for transparency of financial
   flows in all instruments, and make the information
   available in an easily accessed form.
   8 RATING-AGENCY REFORM
   Eliminate special status of rating agencies. Reform
   pay structure for rating agencies to align incentives
   better so they are paid over time as their
   ratings prove to be accurate.
   9 CONSISTENT REGULATORY SYSTEM
   Include nonbank financial institutions under
   regulatory umbrella and require them to provide
   information to the systemic regulator. Regulation
   should be risk-based. Firm-specific information
   should be private, and only aggregate information
   made public.
   10 CONSTRAIN LEVERAGE
   Limit leverage across large, systemically important
   financial institutions, and enhance capital
   requirements for certain products. Be clear about
   how risk gets measured for purposes of leverage
   and capital requirements.
   11 LET TARP CAPITAL BE REPAID
   Make regulators explicitly state conditions
   for the repayment of money to the Troubled Asset
   Relief Program.
   12 EXECUTIVE COMPENSATION
   Limit the government role in executive compensation
   to companies where the government
   has a stake. Companies should be sure executive
   compensation provides the right set of incentives.
   13 TRANSPARENCY BEFORE REGULATION
   Systemic risk regulator should require all
   firms first to provide information. Regulation
   should be limited to those deemed to pose a systemic
   risk. Intermediaries with sufficiently long
   investor lock-ups and sufficiently low leverage relative
   to risk should be granted a safe harbor from
   regulation. Regulator should publicly disclose
   cross-industry liquidity and concentration risk.
   14 PRICE AND VOLUME TRANSPARENCY
   The industry should publish price and volume
   data on over-the-counter derivatives.
   15 FED SHOULD BE SYSTEMIC RISK REGULATOR
   The Federal Reserve should be the systemic
   risk regulator of nonbank financial institutions. It
   is important that the regulator be independent
   and apolitical. We recommend using private-sector
   advisory bodies. In order to take on these responsibilities,
   the Fed may have to reallocate
   some responsibilities to other agencies.
   16 ENSURE SUCCESS OF PUBLIC-PRIVATE
   PARTNERSHIPS
   To improve the chances that the Public-Private Investment
   Program works, the government should
   recognize that many sellers of these assets are reluctant
   because of the impact on their balance
   sheet, and should allow for regulatory forbearance
   on capital requirements or accounting flexibility.
   17 ACCOUNTING RULES
   Have a sensible set of accounting rules to reflect
   value for financial reporting and capital
   purposes.
   18 NEW RESOLUTION AUTHORITY FOR
   NONBANKS
   Create an FDIC-like model for winding down nonbank
   financial institutions that pose system risk.
   Adopt global standards for determining how different
   classes of creditors are treated.
   19 AUDITORS ENFORCE CONSISTENT MARKS
   Encourage disclosure of disparate asset
   marks, by asking auditors to raise instances of
   price discrepancies among clients.
   20 LIMIT FORECLOSURES
   More efforts to limit foreclosures through interest
   and principal reductions, rent-to-own and
   other creative solutions. Create a new federal
   agency with sufficient resources to limit foreclosures.
   Force banks to identify potential troubled
   borrowers.

3. “Decapitation”. I think it’s a brilliant pun… “de-CAPitation”. Take away the marbles. To my way of thinking, the main thing is that all of this chaos/complexity/details/ranting/investigating/psychoanalysing simply points to the fact that a “price system” will not work in a high-tech world on a finite planet. When will we start addressing that?

4. It’s refreshing to see someone with the guts to speak the truth to the sleeping masses, many of whom chose to display their ignorance in a public forum, under the guise of being “financial experts.” Just like we can look back now & view people laughing at Peter Schiff’s comments in 2006 on youtube, in a few months, when the world is in the full throws of the Great Depression II, everyone will say, what happened to the billions we gave the bankers, & why weren’t they prosecuted for their crimes? (& then the masses will seek them out & it just may turn out to be exactly like the French revolution…) altho of course I hope it doesn’t come to decapitation!

5. This from the Beeb:

   It’s a mystery that has got British law enforcement officials and others across the planet scratching their heads. Put bluntly, enough heroin to supply the world’s demand for years has simply disappeared.

   The United Nations Office on Drugs and Crime (UNODC) describes the situation as “a time bomb for public health and global security”.

   http://www.bbc.co.uk/blogs/thereporters/markeaston/2008/10/map_of_the_week_the_mystery_of.html

6. Jarno,

   I don’t know. China would have to balance unemployment in the short term to long term interests. And I wouldn’t believe China’s mythical 7% growth rate; China reports their numbers differently than every Western country(or even Japan), and was obviously lying about their growth rate during late 2008. China announced growth even with tens of thousands of factories idled AND the announcement of lower energy usage.

   The US business model that depends on high credit is broken.
   If the real estate boom HAD NOT happened, unemployment would have been much higher 2002-07.

   The only thing that can save the system AND be good for most Americans would be a breakthrough in energy technology lower operating costs across the board for all businesses. Otherwise, it’s just mass inflation with high unemployment for all. I thought maybe 6 months ago that sovereign wealth funds from the Middle East and Asia could just bailout the residential and commercial real estate markets….but that seems unlikely now since this would not help relieve unemployment in those same foreign countries.

7. Crac,

   Should the Yuan become fully convertible and become the reserve currency, what challenges do you see for China? Can they handle it from the economic standpoint?

   For example, #2 should improve quite a bit for China as well as any other import good or resource. But their export business will suffer tremendously. Is their population wealthy enough to consume all the goods they produce as well as all other imports and still sustain a 7% growth rate which the country needs? Does the country have enough resources to export (including technology) to keep trade balanced? Resorting to tariffs will likely undermine their effort. I would think that a country that can survive independently is the country whose currency can act as a reserve. I also think that the Cultural Revolution and lack of a consistent law has damaged the people quite a bit and are serious obstacles. I have no documentation of these, only how they have conducted themselves in world business and trade.

   Thanks,

   Jarno

8. I meant to say how COULD we leave Afghanistan out of this. Afghanistan is so tied in to the issue!

9. How could we NOT leave Afghanistan out of this…

   There was a Dilbert cartoon a few months ago that also hinted at the drug cartel being the source of funds for the bailouts.

10. I have an idea they’re siphoning off trillions of dollars to fund infrastructure for an even bigger scam. Pitting productivity vs. unproductivity. Carbon credits on global, national and down to a personal level. Previously they’ve only been able to market human activity. It occured to me after the global lights out following the G20 meeting. In the name of climate change and saving the planet. There’s a market for inactivity. Possibly lynchpin of the new world order economy and it’s agenda for monitoring human activity. It could even bring about mandatory Sunday rest (global lights out), require mandatory attendence to a world church and fullfill some bible prophesies. Mark of the beast for one.

11. byron,

    http://www.asianews.it/index.php?l=en&art=14131
    “The first experiment is limited to transactions between Hong Kong and the neighboring provinces. It is also proposed that the yuan renminbi be used in 8 neighboring countries, including Russia. With these countries, agreements have already been signed for the settlement of contracts in the Chinese currency. Perhaps it is no coincidence that the news was released on Christmas Day, when Western markets are closed, reducing the impact on the dollar.”

    It’s experimental. No announcement to make it fully convertible, but China is using the mere possibility as a bargaining chip.

    I’ve been trying to think of what “bargaining chips” the US really has besides military might and information wars. The biggest poker chip the US has are:

    1)allowing access to the largest market in the world
    2)control of oil
    3)control of food

    #1 has kept Japan towing the American line for the last 30 years…but this trading system seems broke right now. Maybe the US offers Japan the end of General Motors, and China ownership of our overpriced commercial real estate?

    Japan usually tows the western line, but never fully trusts the West as well. This is why they heavily subsidize their home ag industry because of the possibility of widespread famine (like in Germany) after the world wars. Japan has also seems to be limiting the number or nanotech patents they publish the last few years…without any apparent decrease in funding research.

12. Crac:

    Can you tell me where to find info. on China’s intentions in regard to making its currency convertible?

    Thanks.

    Byron

13. So a funny thing happened on Sunday.

    1. I was reading Jim Willie’s last article “China: Partner, Adversary, Rebel.” http://news.goldseek.com/GoldenJackass/1238169622.php . His explanation for the US dollar rise during late 2008 (when reasonable people expected it to fall with US financial chaos) was a massive buying spree of US-T bills by Caribbean bank centers, “from $117 billion in July 2008 to a hefty $204 billion in October 2008.” China and Russia (apparently) is also very very angry with the US. Willie also says in his article on Davos that the major powers can’t agree on ANYTHING right now.

    2.I went to my paperback of Gold Warriors and looked in the index for “Citibank.” 10-page section on the bank (p.222-232). pp226-7 says:”The solution was simple. Citibank would move all Santy’s assets offshore, from Citibank New York to Cititrust in the Bahamas. This would have the effect of putting the bullion outside the jurisdiction of New York courts, blocking any lawsuits contemplated by heirs.” Huh? Wonder if that has anything do with #1.

    3. I read a Gary North article mentioning Soros saying commercial real estate to fall 30% in the US, but PRICE INFLATION otherwise.

    4. I read GEAB’s 2009 March 16 article making me now believe that the “euro will implode” meme the last few months is mostly disinformation. http://www.leap2020.eu/GEAB-N-33-is-available!-Growing-Transatlantic-tensions-on-the-eve-of-the-G20-summit-An-illustration-of-Wall-Street-s-and_a2940.html
    . GEAB also says that the major powers can’t agree on ANYTHING right now.

    5. I wanted to know if China was really angry or if their public diplomatic position of hating the US dollar was just for domestic consumption. Did some searching for “yuan” and “reserve currency.” I found that China began EXPERIMENTING in DECEMBER 2008 with neighboring nations on making the yuan fully convertible. [holy **expletive**] But no details. [For those that don’t know, China’s currency is not fully convertible on world markets which allows the nation to control capital flows and prevent attacks on their currency by speculators (like Soros)…but this also prevents the currency from being used as a reserve currency like the US dollar or euro.]

    …
    If China REALLY is angry with the current situation, they will throw off the whole “exporting nation to get richer” idea and focus on domestic production AND consumption. My guess is that a fully convertible yuan would appreciate from the current dollar peg A LOT. With Russia agreeing to barter on their side, they would need one more major power’s cooperation (Japan?) to become a regional Asian hegemon. And this would mean that all US imports from China would probably double in price (my guess)…which explains the whole rapid US inflation idea I couldn’t rap my head around before).

    Oh boy.

14. “Why is the US pursuing so-called terrorists in nations like Afghanistan when they let these guys roam free on Wall Street?”

    Sibel Edmonds and Valerie Plame exposed the link between the World Bank, Turkey, and Afghanistan. In today’s Doonesbury, he reveals more of the story. The poor Afghani get nothing. The warlords get a little. The Russian-Israeli Mafiya in Turkey get a lot, and so does the World Bank. It ain’t all that hard to figure out.

15. There is a Grandsire of blatant humor here:
    http://wideeyecinema.com/?p=634
    http://wideeyecinema.com/?p=1025

16. Max Keiser just blows me over with his in-your-face candid responses which stun the consensus sleep walking majority. I just laughed and laughed as he spoke truth to people and power. When I showed his previous work from Al Jazerra to my fund mangers I teach about issuing a fatwa against Hank Paulson – they just laughed so hard… because he was saying things no one else dared say. And here, decapitation! Just totally rightously funny and that’s what we need when dealing with such a grave problem. In my book he’s up there with Stephen Colbert… Enough said.

17. Richard:

    I have not seen any results. If there are any reports you can point to, particularly transcripts, delighted to take a look.

    The strongest possibility for enforcement action is state and local legislators and district attorneys willing to act against federal encroachment.

    Check out the Feds vs. States blog post,

    Catherine

18. Dear Catherine: As a side thought: Are you aware of any results from the March 23-24 Meeting/Seminar/Workshop held in Washington DC and organized by the WSJ and George Soros?? Mr Robert Pickle CEO of the International Swaps and Derivatives Association among a number of “dignitaries” attended as an honored guest/speaker…Otherwise, between Max’s constant ranting about the ‘FINANCIAL TERRORISTS” and your correctly naming this a “financial coup d’etat”; besides decentralizing is there a law enforcement organization that can be called upon to bring civity to our forelorn country…and bring indictments as with Bugliosi’s idea that the Bush Cabal can be indicted by state or local DA’s??? Clearly Gov. Cuomo is not the “Sheriff of Wall Sreet” as you so clearly illustrate his prior work during his HUD/FHA days as written about in your website was less than pristine..Well keep up that pleasant effort onward, Richard

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