Wall Street vs Main Street
Bucks County Courier Times
April 6, 2016
If Hillary Clinton is not the Democratic nominee for president — brought down by either Bernie Sanders or the FBI — Wall Street’s control of the White House is in jeopardy. This explains why the establishment is desperate to stop Donald Trump and install a Wall Street-friendly GOP candidate.
Obama seems to be leaning toward saving Hillary from an indictment. He was in Milwaukee days before the Wisconsin primary election to sing the praises of Obamacare and make sure Hillary does also.
Two weeks before, Obama stunned our British and French NATO allies by laying blame for the fiasco in Libya on their “failure” to do enough as allies in that campaign to destroy Kaddafi and the Libyan government.
The message? “Don’t blame Hillary. We had it all figured out and Libya would have worked out great, except for our unreliable allies.”
This followed a March 7 press conference in which the president reassured the nation that all our Wall Street woes are behind us, again giving Wall Street’s Democratic candidate, Hillary more cover and pushing back on Bernie Sanders and Wall Street critics.
Flanked by the Wall Street flunkies that dominate his administration, the president told the nation, “Irresponsible, risky bets [the derivatives] with inadequate safeguards and that reward executives who take those risks, can cause enormous damage to our economy overall.”
No kidding? Really?
The president continued, “Wall Street reform, Dodd-Frank, the laws that we passed have worked.”
This claim is demonstrably not true. The reality is that the danger of another Wall Street crash is greater than ever. The Too-Big-To-Fail banks (that failed) now control an even larger slice of the U.S. financial pie. The derivatives market has ballooned to a $700 trillion exposure, ripe for another domino-like collapse, just like 2008.
The president insists that the Dodd-Frank reforms have moved these derivative bets between Wall Street banks and counterparties out of so called “dark pools” and other impenetrable trading platforms, to trading in the open at what are called “clearinghouses.”
Said Obama, “We are moving in the derivatives sector; a huge amount of oversight and regulation, and now you [investors and depositors] have clearinghouses that account for the vast majority of trades taking place so that we know if and when somebody is doing something that they shouldn’t be doing; if they’re over-leveraged in ways that could pose larger dangers to the financial system.”
Very reassuring, if it were true. But it isn’t. Days ago, the Office of the Controller of the Currency (OCC) reported the facts.
“In the first quarter of 2015, banks began reporting their volumes of cleared and non-cleared derivatives transactions, as well as risk weights for counterparties in each of these categories. In the fourth quarter of 2015, 36.9 percent of the derivatives market was centrally cleared.”
Do the math. The “vast majority,” 63.1 percent of derivatives are still traded in the dark, and as Wall Street watch dog Pam Martens observed, “According to the latest OCC report, only 16.8 percent of credit derivatives are being centrally cleared.”
These are the most dangerous derivatives. The kind that blew up the global insurer, AIG in 2008 and can set off the next crash.
Just five of the biggest banks — Citigroup, JPMorgan Chase, Goldman Sachs, Bank of America, and Morgan Stanley — hold $231 trillion of derivatives. There isn’t enough money on the planet to cover a run on this interconnected risk.
Martens warns, “The Wall Street banks are counterparties to each other on these bets, and/or there is another insurance company, global bank or sucker corporation out there somewhere that is sitting naked with no money to pay off these bets.”
Wall Street knows the danger of another crash is real and is desperate to maintain control of the White House, the Treasury and Justice Department especially, to insure that when the crash comes, the American people will again be left holding the bag and, once again, none of the banksters will go to jail.
The “bail in” will replace the “bail out.” Depositors’ funds (individual and municipal) will be confiscated to save the once again failing banks. The FDIC will go bankrupt in a day as depositors run for the door, forcing Congress and the taxpayers to save what is left of depositors’ money.
Individual depositors, that is. The deposits of cities, counties and states enjoy no protection whatsoever.
Something to consider as you decide who the next president of the United States will represent: Wall Street or Main Street?