Gaming the Market » Monopoly

Geithner’s Silent Crisis

GTM — Thu, 22 Jan 2009 17:17:00 +0000

"The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States." - Mission Statement

The following story was first published here at GTM in July 2008 when no one heard of Tim Geithner. He’s now about to take control of the U.S. Department of the Treasury. It is important to understand some of his past history. This is a history beyond tax evasion and public lies, even though his weasel-like behavior is consistent. The point is, Tim Geithner knew a market crash was coming and kept silent. Perhaps it was to allow his connections in JP Morgan and Goldman Sachs to profit and gain power. If I personally knew such things I’d be dead or too compromised to publish this.

There is one man who knows:

Last September The Washington Post showed how Geithner will become Paulson 2.0: In Crucible of Crisis, Paulson, Bernanke, Geithner Forge a Committee of Three

The media is now beginning to blame President Obama for socializing the monetary system. This is a myopic diversion from the truth. The system was designed to fail before Obama had any power. The U.S. financial system was gutted when Phil Gramm, his wife, and Tim Geithner (along with their minions) removed safety measures built into the financial matrix. In a few short years they tore down what took decades to build. See story.

Regulations used to be in place to prevent exactly what has happened. Gramm re-wrote the law and UBS made a quick buck, along with Gramm as their chief lobbyist. Geithner’s job when he took office at the NY Fed was to supervise counterparty risk in the derivatives market. That was five years ago. This man had oversight of a market twice the size of the U.S. economy. Can he now be trusted with your retirement money?

Using Crisis to Monopolize Fed Control [July 2008]

One topic retail investors hardly read about is the over the counter derivatives market. Credit default swaps between banks and hedge funds is one of the prime drivers causing the Wild West scene in financials. There is a ton of paper floating through the system with unknown market value. The results of this practice can be read on the front page of any financial paper today.

There is a theory that the PPT is fighting for their life against naked short selling and similar tactics used in the OTC market. It must be infuriating for them to pump nearly a trillion dollars of liquidity into the market to see it driven lower.

Enforcing the law to ensure proper short selling isn’t the only way the PPT is attacking the market and hedge funds that drive it. The New York Fed is pushing forward on July 31, 2008 with the next leg of a master plan. They are working to completely reform global OTC derivatives markets into a single central counterparty (CCP). This will put market control in the hands of 17 banks. Two prime brokers in the US market are Morgan Stanley and Goldman Sachs. Both are firms tightly linked to Washington.

Why OTC Paper Have Vast Unknown Values (See Chart!)

What is the Derivatives OTC Market?
“Credit derivatives have been perhaps the most important and successful financial innovation of the last decade.” (Acharya and Johnson)

Markets for credit derivatives have helped banks create synthetic liquidity in their otherwise illiquid loan portfolios. For example, Citigroup had distributed a large portion of its exposure to Enron through issuance of credit-linked notes at regular intervals (in the two-year period preceding default of Enron). The final effect of Enron’s collapse on the balance sheet of Citigroup was as a result small compared to the size of its loan exposures to Enron.

[This is a simple explanation of course. The real explanation is this market is so complex it’s beyond the comprehension of many insiders.]

Who Benefits? (from Gary Aguirre 2006)

Hedge funds execute up to 50% of the daily trading on the New York Stock Exchange. They also do 70% of the trading in the US distressed debt market, US exchange-traded fund market, and the convertible bond market.

Who also profits from hedge funds? The people they pay above market commissions to. Investment banks collected $15 billion either directly from hedge funds or because of them, producing $6 billion in profits.

Aguirre states, “For individual firms, hedge funds were critical to last year’s [2005] performance. They produced one-quarter of Goldman Sachs’s profits, estimates Guy Moszkowski of Merrill Lynch, and only a slightly smaller slug of Morgan Stanley’s returns.”

Times Change But Tactics Do Not

There is a potentially a predatory form of trading by hedge funds in the credit derivatives market: “It was the hedge funds creating a credit event by forcing the bond price down and trying to get the rating agencies to downgrade the company to benefit themselves: they were scaring everyone into selling.” (Henry Snedel, December 5, 2002, in Deals and Deal Makers, Wall Street Journal)

J.P.Morgan was offering $209,000 to buy credit default protection on a $10 million loan to Altria Group Inc.’s Philip Morris tobacco unit and was offering to sell that same contract to anyone for $221,000 – a difference of 5 percent – according to Bloomberg data. On the same day, J.P.Morgan was offering to pay $9,000 to sellers of protection on $10 million of newspaper publisher Gannett Co.’s debt while charging $21,000 to anyone who wanted to buy the same protection, a difference of more than 100 percent. (Bloomberg Markets “Credit Swaps, High Risks Few Rules” June 6, 2003)

Fed Preps for a CCP (from the NY Times –> Feb. 2007!)

Timothy F. Geithner took the helm of the Federal Reserve Bank of New York in 2003. High on Mr. Geithner’s to-do list is understanding and monitoring the $26 trillion credit derivatives market — twice the size of the United States economy — the fastest-growing financial market there is.

Even the heads of some of the world’s biggest banks seem overwhelmed by the size and complexity of credit derivatives. “It makes my head swim,” said Kenneth D. Lewis, the chief executive of Bank of America.

Mr. Geithner’s job, when he is not working on monetary policy, is to make sure they are prudently managing that risk.

When Mr. Geithner arrived at the New York Fed, E. Gerald Corrigan, a former Federal Reserve president himself, suggested that he look at the conclusions of the Counterparty Risk Management Group Report, the report compiled after Long-Term Capital. Mr. Corrigan thought it might be useful to look at those risks in the context of the rise of private money and the rapidly transforming credit markets.

In 2004, Mr. Geithner’s staff conducted an extensive review of counterparty risk. But rather than dump its conclusions on the industry, he chose to stay behind the scenes while encouraging Mr. Corrigan to reconvene the group. In January 2005, Mr. Corrigan brought together a group that included some of the most senior executives on Wall Street. Six months later, the group produced a report that made 47 recommendations on issues from the very technical to the philosophical.

Central to the report’s findings were shocking weaknesses in the way credit derivatives were being assigned and traded around without any sense of who owned what. The so-called “assignment issue” was simple: credit derivatives were negotiated by two parties, say JPMorgan and Goldman Sachs. But banks were “assigning” the contracts out to others — like hedge funds — without telling each other. It was a little bit like lending money to a friend who is really rich who in turn lends it to her deadbeat brother and fails to mention it.

“It violated the first and most sacred principle of banking: know your counterparty,” Mr. Corrigan said.

Standards were set, and backlogs came down sharply…The industry felt triumphant about being part of the solution. It was a classic “collective action” problem solved: the industry had set an abysmally low standard and no one would budge for fear of losing business, so someone had to move everyone.

Improving the processing of credit derivatives was only the first step. Soon after, he initiated a comprehensive examination of stress-testing, looking at how banks measure and test exposure to certain market players and market risks in different kinds of conditions, like the failure of one major firm.

When Long-Term Capital Management tottered on the brink of collapse in 1998, the credit markets in the United States were controlled by such a small number of institutions that the New York Fed had to make calls to 14 Wall Street banks to try to resolve the crisis. Today, the number of institutions would be vastly higher.

“The fact that the banks are stronger and risk is spread more broadly should make the system more stable,” Mr. Geithner said. “We can’t know that with certainty though. We’ll have a test of that when things next threaten to fall apart.” Regulators struggle to imagine what the shock could be, but do know that the reaction will be far different from crises of the past.

[Odd the Fed had no idea they would soon be swamped with debt obligations from mortgage backed securities after spending so much time on OTC market mechanics?]

What the Last CCP Meeting Determined (from Reuters)

Among the issues agreed upon were more automation and standardization of derivatives trade processing, and the development of a central counterparty, or clearing house, for credit default swaps, the Fed said. Central clearing houses, which backstop trades done by all participants, lower the risk that the failure of a single major market player can have a domino effect on markets and thus pose a systemic risk.

The proposals would cover a range of OTC markets, from equities, interest rates and foreign exchange to commodities. The 17 firms at Monday’s meeting represented more than 90 percent of credit derivatives trading.

Who Are Some of the US Banks?

[Two years after “problem solved” the Bank for International Settlements in March 2007 warned of the following Bear Stearns scenario.]

Glaring Weakness (BIS report)

The report concludes that, since 1998, the clearing and settlement infrastructure of OTC derivatives markets has been significantly strengthened. But further progress is needed in some areas:

• market participants should identify steps to mitigate the potential market impact of replacing contracts following the closeout of one or more major participants.

In addition, as the market infrastructure moves further in the direction of centralised processing of trades and post-trade events, several issues will assume greater importance:

• providers of essential post-trade services for OTC derivatives should provide open access to their services and should aim to achieve convenient and efficient connectivity with other systems

Markets for OTC derivatives are generally are less liquid than markets for exchange-traded derivatives, and traditional procedures for a CCP to handle a default may not be effective. When a participant defaults, the CCP terminates all of its contracts with the defaulting participant. The traditional procedures for handling a default, which are used by CCPs for most exchange-traded derivatives, call for the CCP to promptly enter the market and replace the contracts, so as to hedge against further losses on the open positions created by termination of the defaulter’s contracts. But if the markets for the contracts cleared by the CCP are illiquid, entering the market may induce adverse price movements, especially if the defaulting participant’s positions are large. Consequently, the application of traditional default procedures to illiquid OTC contracts may entail significant risk to the CCP.

Prime brokerage is a service offered by banks and broker-dealers to buy-side investors (typically hedge funds), and is built around financing funds’ positions and facilitating clearing and settlement of their trades. Traditionally, prime brokerage involved financing and securities lending services used by market participants taking long or short equity positions. Over time, the services extended to fixed income and foreign exchange markets. Most recently, a form of prime brokerage known as OTC derivatives prime brokerage has been developed and marketed almost exclusively to hedge funds.

Potential Fallout From a Fed Driven CCP (from RGE Monitor’s London Banker)

One such plan that strikes me as worrying is a master plan for reforming global OTC derivatives markets toward a single central counterparty (CCP). The planners are the big institutions that provide leadership to these markets – the New York Fed and its core constituency of top tier derivatives dealers. They have been meeting for some time, at least four occasions that have been disclosed, and are now rolling out their plan for centralized clearing of OTC derivatives.

One doesn’t have to be a conspiracy theorist to see that it is sensible for this small coterie to plan and execute a long term strategy that promotes their collective self-interest. It stands to reason that they would rather be more powerful than less powerful, more profitable than less profitable. It is not unreasonable to suggest that one means of preserving power and profits requires imposing “solutions” to each “crisis” that institutionalize their influence over markets they dominate.

Tim Geithner, president of the New York Fed, is the godfather of this plan. Geithner recently hosted a meeting for the chosen seventeen shareholders of the CCP at the New York Fed to push the plan into realization, setting a deadline for proposals of July 31st that leaves no scope for opposition or alternatives.

While I am happy to concede that there are real risks that are unaddressed in OTC derivatives markets, I am less happy to embrace a solution which would institutionalize huge power to manipulate these markets in the hands of banks which are themselves core dealers and prime brokers in these markets, accounting for 90 percent of trades.

If these seventeen banks, or a smaller subset of these banks, were to collaborate rather than compete, then they would be in a position to manipulate prices, manipulate credit, manipulate leverage, and manipulate margin calls for every traded commodity and every market counterparty. That would allow them to dictate who gains and who loses over time in these ill-transparent and under-regulated markets. If that manipulation were only exercised periodically and unpredictably, they would have very little risk of ever being challenged, investigated, prosecuted or sanctioned.

Think of the possibilities if such infrastructure were in unscrupulous hands. A target country would find their export commodities devalued until their resources were sold at bargain prices to the “right” multinational owners. A target counterparty would find their credit constrained at just the time when margins were raised or collateral devalued, making them a takeover patsy at a knockdown price and guaranteeing a swift profit to the lucky acquiror.

The Geithner CCP proposal strikes me as mandating a casino where the seventeen dealers at the seventeen tables own the casino, control credit, control the odds, control the deal and can determine who wins and loses. If your only choice is to go from one rigged dealer-owned table to another rigged dealer-owned table run under common management, that isn’t much of a choice.

Sources:

More CCCP Than CCP – Danger of a Rigged OTC Casino
by London Banker
Jul 11, 2008
NY Fed: dealers, regulators agree on OTC reforms
Reuters
Mon Jun 9, 2008 6:06pm EDT
Calm Before and During a Storm
New York Times
by Jenny Anderson
February 9, 2007
ISDA 23rd Annual General Meeting
International Swaps and Derivatives Association, Inc.
Vienna
April 15-17, 2008
New Developments In Clearing And Settlement Arrangements For OTC Derivatives
Committee on Payment and
Settlement Systems
Bank for International Settlements
March 2007
Insider Trading in Credit Derivatives
Viral V. Acharya and Timothy C. Johnson
May, 2005
Pass the Parcel-Credit Derivatives
The Economist
January 18, 2003
Testimony of Gary J. Aguirre, Esq.
Before the United States Senate Committee On The Judiciary
June 28, 2006
http://www.ny.frb.org/aboutthefed/orgchart/geithner.html

Corporatocracy in Motion

GTM — Fri, 16 Jan 2009 21:18:00 +0000

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together. -President Dwight D. Eisenhower

These prescient words were given during his Farewell Address to the Nation on January 17, 1961.

He warned us about the dangers of monopoly and how we must stay vigilant lest we forget and allow such systems to enslave us. Eisenhower was concerned that future leaders would not have the strength or experience to block the advance of corporate empire builders. The military-industrial complex, although it still uses bombs, has become more seductive. Today they use weapons of mass financial destruction. The first film details these methods. They also use food as a weapon and the second film will detail those.

Our financial markets are a clear example of monopoly at work; see JPM story, MON story and GE solar story. This market crisis has been engineered by deregulators; see Phil Gramm story. The goal is putting greater power in fewer hands; see meltdown story. They get the gold mine and we get the shaft.

The following videos will enlighten you to the methods corporations use to empower themselves and marginalize everyone else. This effects how you and I live every day. How much “daily news” actually impacts your daily life? This is real news. Let’s explore some of the methods behind the madness.

The Corporation

WINNER OF 26 INTERNATIONAL AWARDS including the 2004 Sundance Film Festival.

The Corporation has emerged to be today’s dominant institution, one that creates great wealth but also great harms. This documentary examines the history of the corporation and the role it plays in society and our everyday lives. They are artificial creations to produce profit sometimes likened to an eagle, a whale, or a Frankenstein monster out of control.

Le Monde selon Monsanto

On March 11, 2008 a new documentary was aired on French television (ARTE – French-German cultural TV channel) by French journalist and film maker Marie-Monique Robin, The World According to Monsanto – A documentary that you won’t see on American television. The gigantic biotech corporation Monsanto is threatening to destroy the agricultural biodiversity which has served mankind for thousands of years.

The results of her three years of research worldwide into Monsanto:

The World According to Monsanto

Parting Thoughts

Multinational Monitor recently published: The 10 Worst Corporations of 2008.

There are many morals to the stories highlighted here at GTM. Something to think about is how you and I participate as investors. There are many ways we subvert our self-interest every day. Some of them we can’t do much about, like paying Federal Income Tax. One of the things we do have power over is where we put our money. Whose hands do we place it in?

This is an amazing resource and archive of free documentaries:

Some great resources exposing Monsanto and world food monopoly:

Monsanto: Profiting Without Conscience

GTM — Thu, 08 Jan 2009 07:16:00 +0000

“Monsanto is big. You can’t win. We will get you. You will pay.” –Seed Police agent

Monsanto had a big day on earnings news and people were clamoring to jump on board. Prime example of a dangerous Wall Street philosophy: “Hey, we’re making tons of money so we don’t care about the consequences of what we’re doing. We’ll deal with that when the time comes.” What the financial press won’t discuss are the ethics of investing in MON. Have you thought about what it means to invest with war profiteers?

Originally this was going to be a piece on the technical merits of shorting MON, but there is a higher moral imperative here. A theme at GTM is the retail investor taking it to the man. If there’s ever an epic poster child for The Man (evil corporate entity) it is Monsanto. There are many fundamental reasons why this company should taste our steel. This article will explore some of corporatocracy’s pervasiveness, and why shorting MON could be psychologically satisfying.

This is going to be a slam piece. That’s right I said it. I’m saying it to all MON longs. Monsanto deserves to be shorted into oblivion. If you eat processed grains that are not organic, you are likely eating Monsanto genetically modified food (which is banned in Europe for safety concerns). Almost every sugar-free product on the market is a Monsanto money maker. If your snack has soybean oil in it, you are certainly drinking from the Monsanto tap–a poisoned source.

Monsanto got their start in 1901 selling saccharin to a Coca-Cola addicted public. Questions arose about the safety of saccharin, and the U.S. Department of Agriculture tried to ban it. They failed in their effort against the Monsanto lobby machine. Saccharin poisoning lead to my grandfather’s death from colon cancer. How many grandparents has Monsanto killed? Ironically, Monsanto’s founder John Francis Queeny died from cancer, possibly saccharin poisoning–poetic justice. The modern version of saccharin is sold as NutraSweet. The chemical is aspartame which Donald Rumsfeld sold to Monsanto earning $12M off the stock. The Bush Administration has been dubbed the Monsanto Cabinet for all their connections to the company. Got your attention now?

We’re going to cover a short background on Monsanto and explore why their world food production monopoly is dangerous. See our prior story on monopoly in Argentina for similar policies. The main quoted source in this article is from the Pulitzer work of Barlett and Steele published in Vanity Fair. Their story is called Monsanto Harvest of Fear.

Let’s start with the Monsanto party line:

As an agricultural and technology company committed to human rights, we have a unique opportunity to protect and advance human rights. We have a responsibility to consider not only how our business can benefit consumers, farmers, and food processors, but how it can protect the human rights of both Monsanto’s employees and our business partners’ employees. — Hugh Grant, Monsanto, Chairman, President and Chief Executive Officer

What’s so Bad About a Chemical Company?

Okay, all fine and good on the surface, but is this trustworthy. Monsanto is after all an American institution. Its safety glass protects the U.S. Constitution and its synthetic fibers are the basis of AstroTurf. However, if they’re such a great company, why did they completely rebuild their corporate image in 2002. By the late 1990s Monsanto rebranded itself into a “life sciences” company and spun off its chemical and fibers operations into a new company called Solutia. Then after additional reorganization Monsanto re-incorporated in 2002 and officially declared itself an “agricultural company.”

Check out the price history of Solutia vs. Monsanto:

It’s as though the original Monsanto, the company that long had the word “chemical” as part of its name, never existed. One of the benefits of doing this, as the company does not point out, was to channel the bulk of the growing backlog of chemical lawsuits and liabilities onto Solutia, keeping the Monsanto brand pure.

Short List of Grievances Against Monsanto:

1917 US government suit against Monsanto over the safety of saccharin
1965-1972 UK landfill illegal toxic waste dumping
Agent Orange chemical warfare +5M people poisoned
1979 dioxin chemical spill Kemner v. Monsanto longest civil jury trial in U.S. history
Responsible for 56 contaminated Superfund sites
Anniston, Alabama mercury and PCB-laden waste discharged into local creeks over 40 years
Terminator seeds that lead to world food shortages, poverty, and death
Recombinant Bovine Growth Hormone Posilac (rBST) (rBGH)
Using coercive tactics to monopolize world markets
Pursuing 500 cases annually against customers for “seed fraud”
Andhra Pradesh Government vs. Monsanto on India seed price fixing
Department of Justice and SEC criminal and civil charges for international bribing
False advertising for “biodegradable” Roundup weed killer
India child labor abuse in the manufacture of cotton-seeds
India farmer suicides +150,000 and counting
Corporate tax evasion at Sauget, Illinois facility
Campaign against dairies which do not inject bovine growth hormone from advertising

Who is Monsanto?

“If you’re talking about PCBs, Agent Orange, Bovine Growth Hormone, water privatization, biopiracy, untested/unlabeled genetically engineered organisms, or persecuting small family farmers, you’re talking about the Monsanto Corporation.” -Organic Consumers Association

Monsanto was founded on chemicals in 1901, starting with saccharin and aspirin, and continuing post-WWII with the most toxic substances ever created by man — PCBs (polychlorinated biphenyls, the stuff we once used in air conditioners) and dioxin (a by-product of creating herbicides and pesticides). And let’s not forget Agent Orange, the defoliant that deforested Vietnam and is linked to veterans’ mental and physical health problems. Monsanto’s chemical past is responsible for over 50 Superfund cleanup sites, including two of the nation’s largest in Nitro, West Virginia and Anniston, Alabama.

From 1929 to 1971, Monsanto’s Anniston works produced PCBs as industrial coolants and insulating fluids for transformers and other electrical equipment. Today, 37 years after PCB production ceased in Anniston, and after tons of contaminated soil have been removed to try to reclaim the site, the area around the old Monsanto plant remains one of the most polluted spots in the U.S. A biologist conducting studies for Monsanto in streams near the Anniston plant got quick results when he submerged his test fish. As he reported to Monsanto, according to The Washington Post, “All 25 fish lost equilibrium and turned on their sides in 10 seconds and all were dead in 3½ minutes.”

On January 1, 2002, New Year’s Day, The Washington Post carried a front page report on Monsanto’s legacy of environmental damage in Anniston, Alabama. Plaintiffs in a pending lawsuit provided documentation showing that the local Monsanto factory knowingly discharged both mercury and PCB-laden waste into local creeks for over 40 years. In a story on January 27, The New York Times reported that during 1969 alone Monsanto had dumped 45 tons of PCBs into Snow Creek, a feeder for Choccolocco Creek which supplies much of the area’s drinking water. The company also buried millions of pounds of PCB in open-pit landfills located on hillsides above the plant and surrounding neighborhoods.

Agent Orange Challenge

See if you can watch all five minutes start to finish and how it makes you feel about investing in Monsanto:

Monsanto might be most famous for its history with dioxin. Agent Orange is the code name for a powerful herbicide and defoliant used by the U.S. military in its Herbicidal Warfare program during the Vietnam War. An estimated 21,136,000 gal. (80 000 m³) of Agent Orange was sprayed across South Vietnam, netting Monsanto vast profits.

The U.S. Department of Veterans Affairs has listed prostate cancer, respiratory cancers, multiple myeloma, type II diabetes, Hodgkin’s disease, non-Hodgkin’s lymphoma, soft tissue sarcoma, chloracne, porphyria cutanea tarda, peripheral neuropathy, and spina bifida in children of veterans exposed to Agent Orange as side effects of the herbicide.

Vietnam veterans and their families who brought the original Agent Orange lawsuit 25 years ago alleged that the government “is just waiting for us all to die.” They alleged that most of those still alive would succumb to the effects of toxic exposure before the age of 65. U.S. veterans obtained a $180 million settlement in 1984, with most affected veterans receiving a one-time lump sum payment of $1,200.

Vietnamese citizens exposed to Agent Orange got a double-edge sword.

According to Vietnamese Ministry of Foreign Affairs, 4.8 million Vietnamese people were exposed to Agent Orange, resulting in 400,000 deaths and disabilities, and 500,000 children born with birth defects. This chemical has been reported to cause serious skin diseases as well as a vast variety of cancers in the lungs, larynx, and prostate. Children in the areas where Agent Orange was used have been affected and have multiple health problems including cleft palate, mental retardation, hernias, and extra fingers and toes.

In February 2004, the newly formed Vietnamese Association of Victims of Agent Orange (VAVA) filed a class action law suit in a New York court, against Monsanto. On March 10, 2005, Judge Jack B. Weinstein – who had defended the U.S. veterans victims of Agent Orange – dismissed the suit, ruling that there was no legal basis for the plaintiffs’ claims.

In June 2001 Monsanto was accused by farmers of Ninh Thuan province of pressuring them to use genetically modified seeds that resulted in corn and maize crop failures and economic ruin.

Monsanto representatives responded with demands and threats urging the authorities to take action against by the state-run Nguoi Lao Dong newspaper (The New Worker) in Saigon, which printed a story about the farmers complaints, based on research done by social scientist Bui Dac Hai.

Agent Orange activists were outraged that Monsanto had returned to haunt Vietnam. Former wartime ambassador Madame Nguyen Ngoc Dung, told CorpWatch: “We have strongly criticized officials responsible for granting a license” (to Monsanto).

The activists say that Monsanto has been assiduously cultivating technocrats inside the ministries of trade, investment and planning, who prefer to put the war totally behind them and believe that any campaign over Agent Orange undermines good trading relations with the US, and is therefore bad for business.

World Seed Domination

“Whoever provides the world’s seeds controls the world’s food supply.” -Barlett and Steele

For nearly all of its history the United States Patent and Trademark Office had refused to grant patents on seeds, viewing them as life-forms with too many variables to be patented. But in 1980 the U.S. Supreme Court, in a five-to-four decision, turned seeds into widgets, laying the groundwork for a handful of corporations to begin taking control of the world’s food supply. Since the 1980s, Monsanto has become the world leader in genetic modification of seeds and has won 674 biotechnology patents, more than any other company, according to U.S. Department of Agriculture data.

Some farmers don’t fully understand that they aren’t supposed to save Monsanto’s seeds for next year’s planting. Others do, but ignore the stipulation rather than throw away a perfectly usable product. Still others say that they don’t use Monsanto’s genetically modified seeds, but seeds have been blown into their fields by wind or deposited by birds. It’s certainly easy for G.M. seeds to get mixed in with traditional varieties when seeds are cleaned by commercial dealers for re-planting. The seeds look identical; only a laboratory analysis can show the difference. Even if a farmer doesn’t buy G.M. seeds and doesn’t want them on his land, it’s a safe bet he’ll get a visit from Monsanto’s seed police if crops grown from G.M. seeds are discovered in his fields.

Monsanto’s fierce reputation for enforcing its patents and suing anyone who allegedly violated them. They go after farmers, farmers’ co-ops, seed dealers—anyone it suspects may have infringed its patents of genetically modified seeds. As interviews and reams of court documents reveal, Monsanto relies on a shadowy army of private investigators and agents in the American heartland to strike fear into farm country. They fan out into fields and farm towns, where they secretly videotape and photograph farmers, store owners, and co-ops; infiltrate community meetings; and gather information from informants about farming activities. Farmers say that some Monsanto agents pretend to be surveyors. Others confront farmers on their land and try to pressure them to sign papers giving Monsanto access to their private records. Farmers call them the “seed police” and use words such as “Gestapo” and “Mafia” to describe their tactics.

Investigators will say, “Monsanto knows that you are saving Roundup Ready seeds, and if you don’t sign these information-release forms, Monsanto is going to come after you and take your farm or take you for all you’re worth.” Investigators will sometimes show a farmer a photo of himself coming out of a store, to let him know he is being followed.

“Monsanto spends more than $2 million a day in research to identify, test, develop and bring to market innovative new seeds and technologies that benefit farmers,” Monsanto spokesman Darren Wallis wrote in an e-mailed letter to Vanity Fair.

What they don’t say is how most of their products have no independent testing. They tell you everything they make is safe and will save money, they submit it to the FDA for a rubber stamp, and their claim goes unchallenged until people get sick or die. When Monsanto faces blowback they pull out all the stops to block the truth.

Their 2008 annual report shows $5B in sales on Roundup and $6.4B in sales on seeds. Monsanto’s environmental and litigation reserve is $272M, roughly half the cost of yearly R&D. They spent over $6M in 2008 lobbying in Washington, D.C. which puts MON in the upper tier of corporate lobbying.

Of the many forms of suffering Monsanto has spread across the globe the latest is starvation. Every day, almost 16,000 children die from hunger-related causes–one child every five seconds. Today our world is home to 6.6 billion people. In 2005, almost 1.4 billion people lived below the international poverty line, earning less than $1.25 per day. They can not afford to purchase food from an international corporation, nonetheless buy suicide seeds Monsanto pushes through a monopoly system. This is corporate bio-warfare targeting defenseless people. Selling seeds that die after one harvest while destroying indigenous crops is a massive global crime. Part of the sad irony is America has turned into the oppressor it fought a Revolutionary War against.

What is Corporatocracy?

This beauty of eternal Calvin wisdom was written over 15 years ago about the auto industry. It still applies today, as it applies to Monsanto.

John Perkins was quoted in our prior story about the banking industry. What he warns of will be featured in Clive Owen’s new movie The International.

The majority of the people in the United States have no idea that we are living off the benefits of a clandestine empire. That today there`s more slavery in the world than ever before. And then you have to ask yourself, ‘Well if it’s an empire, then who’s the emperor?’… We do have what I consider to be the equivalent of the emperor, and it`s what I call the Corporatocracy… At the very top of the corporatocracy you really can`t tell where the person`s working, for a private corporation or the government, because they’re always moving back and forth. So, you know, you’ve got a guy who one moment is the president of a big construction company, like Halliburton, and the next moment he’s Vice President of the United States.” -John Perkins

A Monsanto official told the New York Times that the corporation should not have to take responsibility for the safety of its food products. “Monsanto should not have to vouchsafe the safety of biotech food,” said Phil Angell, Monsanto’s director of corporate communications. “Our interest is in selling as much of it as possible. Assuring its safety is the FDA’s job.”

It would be nice to think the FDA can be trusted with these matters, but think again. Monsanto has succeeded in insuring that government regulatory agencies let Monsanto do as it wishes.

Take a look:

Rumsfeld was chairman and C.E.O. of the pharmaceutical maker G. D. Searle & Co. when Monsanto acquired Searle in 1985, after Searle had experienced difficulty in finding a buyer. Rumsfeld’s stock and options in Searle were valued at $12 million at the time of the sale.

They even had L. Paul Bremer (the guy who headed Iraq between the fall of Saddam and the time the elected government took over) order that “farmers shall be prohibited from re-using seeds of protected varieties.” And we wonder why Iraqis are struggling to appreciate American intervention.

The list of other connections runs long and deep. Several staff attorneys held positions at the FDA and EPA with the common theme of: “Work for Monsanto, get a cushy job in the government for long enough to promote Monsanto products like GMOs or growth hormones, then go back to Monsanto.”

Two standouts, however, are Don Rumsfeld and Clarence Thomas. Thomas, once a lawyer for Monsanto and now Supreme Court Justice, helped steer a patent-rights case through the high court, benefiting Monsanto and other seed companies that tinker with nature.

But that harm was done by the “Original Monsanto Company,” not “Today’s Monsanto Company” (the words and the distinction are Monsanto’s). The Monsanto of today says that it can be trusted—that its biotech crops are “as wholesome, nutritious and safe as conventional crops,” and that milk from cows injected with its artificial growth hormone is the same as, and as safe as, milk from any other cow.

Final Thoughts

They said saccharin was perfectly safe. They said dioxin was perfectly safe. They say Roundup Ready genetically modified (GM) food is safe, but every living thing near it dies. Monsanto products are historically plagued with cancer fallout. One of their most egregious acts is refusal to account for the 3.5M people currently suffering from dioxin poisoning, or acknowledge those who died from Agent Orange. Still trustworthy and worth giving money to?

Monsanto’s CEO says they are a company committed to the protection and advancement of human rights. What he means is Monsanto is committed to the control of those “rights”. Taking food away from humanity to feed livestock and fill gas tanks is barbaric policy. It makes sense if the policy is designed to kill people and reduce world populations. This is a dark subtext to Monsanto’s game plan.

They are selling genetically modified seeds which kill indigenous crops, creating a world monopoly controlling food supply, and driving farmers to suicide. It’s my understanding that GM and Roundup Ready seeds do not increase yield over time, but show a bell curve yield. Transgenic cotton, and other GM seeds, are prone to viral infection and crop failure. Also ground saturated in Roundup poisons future crops and surrounding wildlife. These products destroy eco-diversity.

Another critical issue is destruction of generational planting seeds, like corn in Mexico. Their indigenous seeds become contaminated with Monsanto GM seeds subsidized by the U.S. which is forced into local fields.

All this boils down to Monsanto controlling too much of the world’s food supply. This is more powerful than using bombs or guns. They control the food so they control the people. With this food hegemony they can marginalize with impunity, which is being done in India, Mexico, and S. America. The policy of Monsanto is to inflame bio-warfare with viral GM seed infestation. Taken to the extreme farmers will not be able to save seed or continue sustainable agriculture. Monsanto says they are a food company. Are they profiting by feeding or killing?

Sources:
Monsanto’s Harvest of Fear
Vanity Fair
May 2008
by Donald L. Barlett and James B. Steele
Monsanto Seed Police | Big Brother is Watching
May 6, 2008
Agent Orange Victims Sue Monsanto
http://www.corpwatch.org/article.php?id=11638
http://en.wikipedia.org/wiki/Agent_Orange
http://www.purefood.org/monlink.html
http://www.monsanto.com/responsibility/human_rights.asp
http://www.organicconsumers.org/articles/article_14926.cfm
http://www.monsanto.com/pdf/pubs/2008/annual_report.pdf
http://www.bread.org/learn/hunger-basics/hunger-facts-international.html
http://www.sourcewatch.org
http://www.globalresearch.ca
http://news.bbc.co.uk/2/hi/business/4153635.stm
http://www.combat-monsanto.co.uk

Three Great Banking Documentaries

GTM — Wed, 12 Nov 2008 06:57:00 +0000

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as self-evident.” -Arthur Schopenhauer

Many of us right now want to be “realistic” and believe the financial system will correct itself. The optimist in us, with a lifetime of programming, thinks things will get back to normal. The market will right itself over time, like it always has. The truth is our financial system has been so fundamentally damaged we will never return to what we once thought was normal. Watch the following three documentaries and you’ll better understand why this is true.

Reliance on Foreign Capital
Before we get to the films I’d like to expand on a few ideas to ponder while you watch. One is reliance on foreign capital. During the election the issue of the United State’s reliance on foreign oil was hammered over and over. None of us heard scripted speeches on the reliance of massive foreign capital. A reliance that drove Americans to fight England and its corrupt banking system in the American Revolutionary War. Guess what country is #1 in external debt right now. So how did the US fall so far of the path of its national heritage?

Part of it is blind disregard to fundamental systemic threats. The threat of $150 oil has been well known for decades. Only once $150 oil became a reality was the threat real. Do we have to wait for a total collapse of the global financial system in order to deal with a $53 trillion U.S. national debt. Many people want to know, “How can this be happening to the richest country in the world?”

Here’s one theory. In 1972, during his first year as director of the Council on Foreign Relations, Zbigniew Brzezinski wrote:

Nation state as a fundamental unit of man’s organized life has ceased to be the principal creative force: International banks and multinational corporations are acting and planning in terms that are far in advance of the political concepts of the nation-state.

Just How Much Money Can They Print?
The documentaries do an amazing job of explaining how money creation works. Everyone knows the U.S. Treasury has been printing money 24/7 for years. What no one really knows is just how long they can add dollars to the system. What is the ceiling to debt creation? Fundamentally, there is a limit based on bank reserve requirements. Also, print too much and hyperinflation enters the system.

During one of the financial crisis grill sessions Congressman Ron Paul asked Chairman Bernanke:

So my question boils down to this. How in the world can we expect to solve the problems of inflation, that is the increase in the supply of money, with more inflation?

Here is a possible answer. The U.S. Treasury with the backing of the Federal Reserve and World Bank are on the path to bailout the entire system. For the U.S. the plan is: Nationalize all debt that is a systemic threat or go bankrupt. The Fed is on the verge of eliminating minimum bank reserve rates. So basically taking them from 10% to 0%. We touched on this issue in a prior story.

Theoretically when 10% of a bank’s credit is held in reserve there is a limit to how much they can loan. When this rate goes to zero there is no limit. The final stop is thus bankruptcy. So this means an all or nothing push to preserve the fiat money system backing the dollar. It’s rally or fail time.

Films and Quotes
The following three videos do a masterful job at explaining the banking system. They explain how fiat currency works, how a reserve banking system functions, and the problems with these systems. Included are some amazing quotes from each film. Look for future articles here at GTM about the Bank of International Settlements and some more solid numbers addressing the theory of “Rally or Fail.” This concept will be expanded upon for sure!

Video Number One: I.O.U.S.A.
Made by David Walker / Jan. 2008

“Many are starting to ask: Where would the U.S. Government turn if it needed a bailout?”

“The only issue that is more severe than this would be the idea that an Islamic fundamentalist would get his or her hands on a nuclear weapon and use it against us. Beyond that there is nothing that is more severe than this. This issues represents the potential fiscal meltdown of this Nation. And it absolutely guarantees, if it’s not addressed, that our children will have less of a quality of life than we had. That they will have a government that they can’t afford.” -Sen. Judd Gregg (Senate Budget Committee)

“We are trying to consume more than we produce. We can do that in the short run, but over the long run it is of course impossible. Without savings there is no future.” -Alan Greenspan (Fed Chairman 1987-2006)

“The Vice President basically told me, ‘We don’t have to worry about deficits.’ Which I got to tell you was really a shock to me… I think we only need to look at the fate of other countries that lived beyond their means for a long time. You inevitably get into trouble. When you get extended to the point that you can’t service your debt you’re finished.” -Paul O’Neill (Sec. of the Treasury 2001-2002) [mentioned in a prior story]

“The first Baby Boomer will reach 62 and be eligible for early retirement social security Jan. 1, 2008. They’ll be eligible for Medicare just three years later. And when those Boomers start retiring in mass, then that will be a tsunami of spending that could swamp our ship of state, if we don’t get serious.” -David Walker (U.S. Comptroller General 1998-2008)

Video Number Two: Money Masters
Made by Bill Still and Pat Carmack / 1996

Prior to his death published in the NY Times:
“These International bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or drive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government.” –Theodore Roosevelt

On the day the Federal Reserve Bill passed:
“This act establishes the most gigantic trust on earth. When the President signs this bill, the invisible government by the Monetary Power will be legalized. The people may not know it immediately, but the day of reckoning is only a few years removed… The worst legislative crime of the age is perpetrated by this banking bill.” -Rep. Charles August Lindbergh

One year after the passage of the Federal Reserve Bill:
“They know in advance when to create panics to their advantage. They also known when to stop panic. Inflation and deflation work equally well for them when they control finance.” -Rep. Charles August Lindbergh

“Increased capital requirements put an upper limit to fractional reserve lending.” -Bill Still

“Our banks cannot loan more and more money to buy more and more time before the next depression, as a maximum loan ratio is now set. It means those nations with the lowest bank reserves in their systems have already felt the terrible effects of this credit contraction as their banks scramble to raise money to increase their reserves to 8%. To raise the money they had to sell stocks, which depressed their stock markets, and began the depression first in their countries.” -Bill Still [refering to Japan which we'll cover in the next article]

Video Number Three: Zeitgeist Addendum
Made by Peter Joseph / Oct. 2008

“We were seeing how very important it is to bring about, in the human mind, the radical revolution. The crisis is a crisis in consciousness. A crisis that can not anymore accept the old norms, the old patterns, the ancient traditions.” –Jiddu Krishnamurti

“Society today is composed of a series of institutions… Yet, of all the social institutions we are born into, directed by, and conditioned upon there seems to be no system as taken for granted and misunderstood as the monetary system.” –Peter Joseph

“The real deception is when we distort the value of money. When we create money out of thin air. We have no savings, yet there is so called ‘capital’.” –Rep. Ron Paul

“New money is always needed to help cover the perpetual deficit built into the system, caused by the need to pay the interest. What this also means, is that mathematically defaults and bankruptcy are literally built into the system.” –Peter Joseph

“There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt.” –John Adams (President of the United States)

“The majority of the people in the United States have no idea that we are living off the benefits of a clandestine empire. That today there`s more slavery in the world than ever before. And then you have to ask yourself, ‘Well if it’s an empire, then who’s the emperor?’… We do have what I consider to be the equivalent of the emperor, and it`s what I call the Corporatocracy… At the very top of the corporatocracy you really can`t tell where the person`s working, for a private corporation or the government, because they’re always moving back and forth. So, you know, you’ve got a guy who one moment is the president of a big construction company, like Haliburton, and the next moment he’s Vice President of the United States.” -John Perkins

“We can either have Democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both. ” -Louis Brandeis (Supreme Court Justice)

“It’s not politicians that can solve problems. They have no technical capabilities. They don’t know how to solve problems. Even if they were sincere, they don’t know how to solve problems. It’s the technicians that produce the desalinization plants. It’s the technicians that give you electricity, that give you motor vehicles, that heat your house and cool it in the summertime. It’s technology that solves problems, not politics. Politics cannot solve problems, because they are not trained to do so.” -Jacque Fresco

“This tendency to blindly hold on to a belief system, sheltering it from new, possibly transforming information, is nothing less than a form of ‘intellectual materialism.’ The monetary system perpetuates this materialism not only by its self preserving structures, but also through the countless number of people who have been conditioned into blindly, and thoughtlessly upholding these structures, therefore becoming ‘self-appointed guardians of the status quo.’ Sheep, which no longer need a sheep dog to control them, for they control each other by ostracizing those who step out of the norm.” -Peter Joseph

What we are trying, in all these discussions and talks here, is to see if we cannot radically bring about a transformation of the mind. Not accepting things as they are! But the understanding, to go into it, to examine it, to give your heart and your mind with everything you have. To find out a way of living differently. But that depends on you and not somebody else. Because in this there is no teacher–no pupil. There is no leader. There is no guru. There is no master–no savior. You yourself are the teacher and the pupil. You are the master. You are the guru. You are the leader. You are everything! And to understand is to transform what is. -Jiddu Krishnamurti

References:
http://www.iousathemovie.com/
http://www.themoneymasters.com/
http://www.zeitgeistmovie.com/
http://abcnews.go.com/Politics/Vote2008/Story?id=3839318&page=1

Crash the Market and Monopolize It

GTM — Tue, 16 Sep 2008 02:02:00 +0000

A day like today brings images of the O.K. Corral. Is it possible once the smoke clears there will only be two prime brokers left standing on Wall Street and not by accident?

One story you will not see in the major media is how and why J.P. Morgan and Goldman Sachs might be the only ones left standing. That’s assuming JPM and MS merge back together. It was the Glass-Steagall Act which broke them up, but thanks to incumbent agenda and Phil Gramm that’s no longer an issue since it was repealed in 1999.

Morgan Stanley’s CEO is John J. Mack. Due to his White House connections he is now in position to lead Morgan Stanley through a period of financial turbulence which was planned for and anticipated by a select group of insiders.

GTM posted in June Gary Aguirre’s whistleblower testimony about Mack (from Wikipedia and MarketWatch):

Aguirre said that he was fired from the SEC on September 1, 2005 because he was aggressively pursuing the investigation and wanted to interview Mack about the findings. According to Aguirre, his efforts to talk to the politically well-connected Mack were blocked by senior SEC officials. This allowed Mack enough time to secure his position as CEO of Morgan Stanley. Had he been investigated in mid 2005 by the SEC, Mack would not have been a viable CEO candidate for Morgan Stanley.

This is stuff that gets people shot, like the O.K. Corral. Our theory is a market crash has been orchestrated or organically allowed to happen. Read our story on the OTC market and you can clearly see how safeguards were prevented by the New York Fed. Like a good ‘ole Western shootout the hedge funds are the ranchers and the large banks are the money men. Some will be sacrificed, but the key families/banks will remain in play. You get the ranchers to kill each other off then snap up their property. Compare the stocks of JPM/MS and GS to the other financial players.

Read our three most popular articles and you will be able to see who is pulling the strings and why they knew this would happen. When you dig into the history of the main players you will find a common thread of prime relationships: social, financial, and political.

For instance, Hank Paulson was Chairman/CEO of Goldman Sachs and on the board of governors of the International Monetary Fund which is closely tied to the Rockefellers who have the Rockefeller Center at Dartmouth where Paulson went to school. They also owned Chase Manhattan Bank which merged with JPM after Phil Gramm paved the way. They sit on the Senate Finance Committee and have guys like Timothy F. Geithner of the New York Fed in their personal think tank called the Council on Foreign Relations.

Guess what corporations sit on that board? That’s right, Goldman Sachs and JPMorgan Chase.

If you’re interested in solar power and free energy you’d be pleased to know General Electric and Big Oil are there too. See our story on who is gaming the solar market.

Like the late great George Carlin said, “It’s a Big Club, and you ain’t in it.”

The point is nothing happens by accident, so be mindful of what you are officially sold as the truth.

The following snippets are from GTM’s three most in-depth articles. Please read the stories and connect the dots for yourself.

Front Running A Systemic Market Crash: PPT Style (posted in July)

“$8.3 trillion of real money is controlling $313 trillion in derivatives!”

This illustrates the sheer magnitude of the problem and the economy-busting potential of a miscalculation. That’s why Warren Buffett calls derivatives “financial weapons of mass destruction.” If there’s a fire-sale in hedge funds or derivatives, there’s nothing the Plunge Protection Team or the Federal Reserve will be able to do to stop a meltdown.

How Manipulators Game the Market (posted in June)

There are roughly 400 key hedge funds linked to illegal activity. In total 11,500 hedge funds have $1.2 trillion under management. Overall, it’s not a big chunk of change. However, that money has a very high cycle rate. Hedge funds execute up to 50% of the daily trading on the $21 trillion New York Stock Exchange. They also do 70% of the trading in the US distressed debt market, US exchange-traded fund market, and the convertible bond market.

Using Crisis To Monopolize Fed Control (posted in July)

Prime brokerage is a service offered by banks and broker-dealers to buy-side investors (typically hedge funds), and is built around financing funds’ positions and facilitating clearing and settlement of their trades. Traditionally, prime brokerage involved financing and securities lending services used by market participants taking long or short equity positions. Over time, the services extended to fixed income and foreign exchange markets. Most recently, a form of prime brokerage known as OTC derivatives prime brokerage has been developed and marketed almost exclusively to hedge funds.

Using Crisis to Monopolize Fed Control

GTM — Thu, 24 Jul 2008 05:53:00 +0000

“The Treasury Department is the executive agency responsible for promoting economic prosperity and ensuring the financial security of the United States.” – Mission Statement