The Great Merger the MSM Won't Touch

[don]

It’s all political now

May 13th, 2010

By David Goldman

Now that the state and the banks have merged in a corporatist alliance, all market news is political news. The market got clobbered today on news that New York State would investigate banks for rigging credit ratings on mortgage-backed securities by providing bad information to the ratings agencies. In my experience, the banks and the ratings agencies had a common purposes, which was to make money. The ratings agencies would advise the banks on how to tweak the portfolios behind Collateralized Debt Obligations so as to squeeze out more incomes. It wasn’t simply a matter of the banks hiring ratings agency experts and gaming the models for their own benefit; the ratings agencies themselves were making most of their money from the CDO market, and volunteered their time and advice to help the banks issue more.

These issues come up because the banks and governments are partners in the attempt to reflate the world economy through deficits comprising a double-digit proportion of GDP in most of the major economies. The banks finance the governments, with money that they borrow from the governments. That’s why many banks showed a profit during every single trading day of the first quarter: with a steep yield curve and nearly zero-cost funding, you have to go out of your way to lose money.

Here’s an update of my favorite data series: the collapse of commercial and industrial lending on the books of major banks and its dollar-for-dollar replacement by holdings of Treasury securities:



The trend shows no sign of abating; when we get the Treasury TIC data for April at the end of this month, we will find out whether foreign banks continue to shovel money into the US Treasury market at the rate of $50 to $60 billion per month.

This symbiosis means that the banking system is in effective government control. As my friend Michael Ledeen–an expert on Italian fascism among many other fields–this is “control without ownership,” or fascism, rather than socialism. Governments and banks will wrangle over the spoils. When the banks look fat the government will use them as a political whipping boy or milk them for taxes; when the banks’ holdings of government securities threaten to topple them, as in Europe last week, the governments will pledge a trillion dollars–and borrow it from the banks.

http://blog.atimes.net/?p=1470

[pescamaaan]

Re: The Great Merger the MSM Won't Touch

i'm a little bit confused by this statement in the article:

The banks finance the governments, with money that they borrow from the governments.

banks are buying treasuries which means they are LENDING to the government and are effectively earning 0% on those bonds. I understand how the governments borrowing costs are zero, but how are the banks costs also zero?

Since banks are funded by deposits, and the deposit accounts are also paying 0% is it not more correct to say that banks profits are up because the short end of the yield curve (on which they pay their depositors) is zero while the the far end of the curve is much higher?

OR...

are the banks repo'ing out and swapping out their treasury holdings for cash (giving them a low borrow cost) to then speculate elsewhere?

[Serge_Tomiko]

Re: The Great Merger the MSM Won't Touch

This symbiosis means that the banking system is in effective government control. As my friend Michael Ledeen–an expert on Italian fascism among many other fields–this is “control without ownership,” or fascism, rather than socialism. Governments and banks will wrangle over the spoils. When the banks look fat the government will use them as a political whipping boy or milk them for taxes; when the banks’ holdings of government securities threaten to topple them, as in Europe last week, the governments will pledge a trillion dollars–and borrow it from the banks.

http://blog.atimes.net/?p=1470

As I find we have the most to learn from fascist attempts to resist the Anglo-American banking cartel during the depression, this is a rather false depiction of fascism.

"Control" was direct, obvious, and not hidden. If anything, an explicit goal of fascism was to throw light upon the nature of surreptitious control of society and culture through usury.

Usury, as a political and social force, is over. It will never come back, and we are now staring down the deep dark abyss. The fascist governments represented the last realistic attempt to thwart this system, and for a time it worked. The Axis Powers were relatively poor countries and small populations. They were able to fight powers that controlled nearly the whole world for many years. Japan was little more than an overpopulated island!

Of course, what we must mostly learn from that age is how to avoid war. Understanding how the political leaders of the 1920s and 1930s understood the very same problems we face now is much more useful than using the name for their movement as a pejorative.

[chr5648]

Re: The Great Merger the MSM Won't Touch

This symbiosis means that the banking system is in effective government control. As my friend Michael Ledeen–an expert on Italian fascism among many other fields–this is “control without ownership,” or fascism, rather than socialism. Governments and banks will wrangle over the spoils. When the banks look fat the government will use them as a political whipping boy or milk them for taxes; when the banks’ holdings of government securities threaten to topple them, as in Europe last week, the governments will pledge a trillion dollars–and borrow it from the banks.

It doesn't matter what you call it, facism or socialism, what is being done is morally repugnant and even a 5 year old could figure out its not right.

This is just another 'useful idiot' out their propagandizing, trying to turn it into a right vs. left thing again. From all the crap I have read the words 'socialism' and 'facism' are probably the most misused words in the western world. Mostly by people who read a wikipedia entry and now proclaim themselves and 'expert'.