The Confidential Memo at the Heart of the Global Financial Crisis By Greg Palast
Posted on | August 22, 2013 | 7 Comments
Greg Palast’s Column
The Confidential Memo at the Heart of the Global Financial Crisis
When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it.
The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3 percent unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.
The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.
The memo is authentic.
I had to fly to Geneva to get confirmation and wangle a meeting with the Secretary General of the World Trade Organisation, Pascal Lamy. Lamy, the Generalissimo of Globalisation, told me,
“The WTO was not created as some dark cabal of multinationals secretly cooking plots against the people… We don’t have cigar-smoking, rich, crazy bankers negotiating.”
Then I showed him the memo.
It begins with Larry Summers’ flunky, Timothy Geithner, reminding his boss to call the Bank bigshots to order their lobbyist armies to march:
“As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs…”
To avoid Summers having to call his office to get the phone numbers (which, under US law, would have to appear on public logs), Geithner listed the private lines of what were then the five most powerful CEOs on the planet. And here they are:
Merrill Lynch: David Kamanski (212)449-6868
Lamy was right: They don’t smoke cigars. Go ahead and dial them. I did, and sure enough, got a cheery personal hello from Reed – cheery until I revealed I wasn’t Larry Summers. (Note: The other numbers were swiftly disconnected. And Corzine can’t be reached while he faces criminal charges.)
It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling. The horror is in the purpose of the “end game” itself.
Let me explain:
The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.
Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”.
Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.
But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?
The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet — in one single move. It was as brilliant as it was insanely dangerous.
How could they pull off this mad caper? The bankers’ and Summers’ game was to use the Financial Services Agreement (or FSA), an abstruse and benign addendum to the international trade agreements policed by the World Trade Organisation.
Until the bankers began their play, the WTO agreements dealt simply with trade in goods – that is, my cars for your bananas. The new rules devised by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.
Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products”.
And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organisation.
Bankers Go Bananas
Why in the world would any nation agree to let its banking system be boarded and seized by financial pirates like JP Morgan?
The answer, in the case of Ecuador, was bananas. Ecuador was truly a banana republic. The yellow fruit was that nation’s life-and-death source of hard currency. If it refused to sign the new FSA, Ecuador could feed its bananas to the monkeys and go back into bankruptcy. Ecuador signed.
And so on – with every single nation bullied into signing.
Every nation but one, I should say. Brazil’s new President, Inacio Lula da Silva, refused. In retaliation, Brazil was threatened with a virtual embargo of its products by the European Union’s Trade Commissioner, one Peter Mandelson, according to another confidential memo I got my hands on. But Lula’srefusenik stance paid off for Brazil which, alone among Western nations, survived and thrived during the 2007-9 bank crisis.
China signed – but got its pound of flesh in return. It opened its banking sector a crack in return for access and control of the US auto parts and other markets. (Swiftly, two million US jobs shifted to China.)
The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade. Among the notorious transactions legalised: Goldman Sachs (where Treasury Secretary Rubin had been co-chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation. Ecuador, its own banking sector de-regulated and demolished, exploded into riots. Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans. Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim – and the continent is now being sold off in tiny, cheap pieces to Germany.
Of course, it was not just threats that sold the FSA, but temptation as well. After all, every evil starts with one bite of an apple offered by a snake. The apple: the gleaming piles of lucre hidden in the FSA for local elites. The snake was named Larry.
Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.
And the memo reveals a lot about Summers and Obama.
While billions of sorry souls are still hurting from worldwide banker-made disaster, Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called “Citigroup”. Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup – which went bankrupt while managing to pay Rubin a total of $126 million.
Then Rubin took on another post: as key campaign benefactor to a young State Senator, Barack Obama. Only days after his election as President, Obama, at Rubin’s insistence, gave Summers the odd post of US “Economics Tsar” and made Geithner his Tsarina (that is, Secretary of Treasury). In 2010, Summers gave up his royalist robes to return to “consulting” for Citibank and other creatures of bank deregulation whose payments have raised Summers’ net worth by $31 million since the “end-game” memo.
That Obama would, at Robert Rubin’s demand, now choose Summers to run the Federal Reserve Board means that, unfortunately, we are far from the end of the game.
Special thanks to expert Mary Bottari of Bankster USA www.BanksterUSA.org without whom our investigation could not have begun.
The film of my meeting with WTO chief Lamy was originally created for Ring of Fire, hosted by Mike Papantonio and Robert F. Kennedy Jr.
Further discussion of the documents I laid before Lamy can be found in “The Generalissimo of Globalization,” Chapter 12 of Vultures’ Picnic by
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August 23rd, 2013 @ 5:40 am
When the Dollar crash comes (and it WILL),all these “PLAYERS” will run and Hide like Cockroaches! It will be the Middle Class and Poor who will SUFFER MOST… While these ELITIST PIGS live like Kings on their STOLEN goods.
August 23rd, 2013 @ 7:59 am
The problem is deficit spending corruption that has been forced on us by Democrats. They have corrupted both sides of the aisle by law. The law that was also created by an illegal process that avoided the protections of the Constitution. Passed behind closed doors shut and locked against the voters by democrats and media. People are desperate now because they have been ambushed. It is not the fault of the bankers or the Fed system. It is those in control of that system. Cut Cap and Bal should be put to a vote. Even than the last election proves we need to make sure that process is not being corrupted by the same corruption that got us here.
August 23rd, 2013 @ 7:59 am
Jesus said ” What good is it for a man to gain in this earth but loses his soul”.
August 23rd, 2013 @ 8:04 am
Orly.
If you read this please you might want to look into the Home Insurance problem going on there now. My bill for a small condo just went up $2000 dollars with no claims from last years and most insurers are dropping out of the State. The US is offering insurance. I suspect this “swing State’ is being squeezed by Obama and the evil ones for political purposes. Help if you can.
August 23rd, 2013 @ 8:06 am
Orly, I forgot mention Florida as being the swing State That I referred to in by post about Obama possibly being responsible for the recent rate increases there.
August 23rd, 2013 @ 8:53 am
The Great Tribulation
15 “Therefore when you see the ‘obomination of desolation,’[c] spoken of by Daniel the prophet, standing in the holy place” (whoever reads, let him understand),
16 “then let those who are in Judea flee to the mountains.
17 Let him who is on the housetop not go down to take anything out of his house.
18 And let him who is in the field not go back to get his clothes.
19 But woe to those who are pregnant and to those who are nursing babies in those days!
20 And pray that your flight may not be in winter or on the Sabbath.
21 For then there will be great tribulation, such as has not been since the beginning of the world until this time, no, nor ever shall be.
22 And unless those days were shortened, no flesh would be saved; but for the elect’s sake those days will be shortened.
August 23rd, 2013 @ 9:44 am
MAJ. HASAN GUILTY ON ALL 13 COUNTS OF MURDER AND 33 COUNTS OF 32 ATTEMPTED MURDER CHARGES!!!