Friday, May 11, 2012



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Obama's Gay Marriage Endorsement a Step in Evolution of American Identity

“I'm glad to see this in the business section, and this is a very good article. It is time the President recognized the world has changed. My grown daughters and son who is a neuro radiologist have helped me become a firm supporter of marriage equality, and sexual preference equality.

Equality for love should now be followed by equality for economic justice - which means putting the sociopathic greed of Wall Street Banks back into the carefully constructed cage of Glass-Steagall and the 1956 Banks Holding Co Act. Then apply the Sherman Act to ologopolistic/monopolistic health carriers; and correct the idea that is OK for many profitable big businesses to park profits and ship jobs offshore.

A majority of Americans is now better informed about the fact that marriage inequality is not fair. When Americans understand the root cause of this depression and vast chasm of economic inequality is the return of Social Darwinism metastasized into Financial Darwinism with the ethic of survival of the richest - we will be on a path to economic fairness.

To fix our society we need to establish a Doctrine of Fairness which extends to economic needs and wants. So we must protest against Financial Darwinism. The past is prologue - and the present provides exhaustive empirical evidence that the survival of the richest ethic controls Congress; motivates Wall St; interferes with regulators intervening, with our court system, and with the objectivity of the Fourth Estate.

To be better informed:”


There is a distinction between making something transparent and whether it should be made.

So Dodd-Frank and the Volker Rule have missed the real point – derivatives add no value to any sector of our economy except for fees going to the Godfathers who run the Wall Street Banks and the minions who serve their sociopathic greed. (The reality is that Greed belongs in a cage.)

Think about the admission of J. Dimon of JP Morgan-Chase yesterday - 2 billion dollars gone down the drain due to failed hedging.  Failed bets on synthetic portfolio derivatives.

Wall Street Banks are rolling the dice to hit target earnings numbers!  That's what is happening.  Betting on highly complex (too complex to explain) synthetic structured investments - based on the anticipated returns to be realized from egregious leveraged risk - conducted in a parallel synthetic financial universe.

Derivatives based on geometric leverage and a shard of virtual value must be outlawed, because the derivative “market” casino is nothing but a disingenuous roulette wheel. If you make a roulette wheel or a huge casino transparent – does this, in fact, lesson the systemic economic risk.

It is generally acknowledged there are SEVEN HUNDRED TRILLION DOLLARS OF DERIVATIVES. And this amount of geometric egregious leveraged phantom stuff to bet on is like a gargantuan Hydrogen Bomb looming over us. So what happens when it is no longer possible to lay off all the bets? Think Lehman and much worse.  And the government has dropped the ball on prosecuting financial fraud!

The essential myth of transparency is that the Volker Rule will empower the SEC to strengthen compliance and tighten risk measurement. And if the past is prologue this is a total misrepresentation about SEC resolve to be concerned with compliance regarding significant issues – as there are significant regulations in existence now that for the past 2 decades the SEC has specifically not enforced. Read my 1989 letter to J. Katz, Secretary of the SEC, in the appendix of How We Got Swindled – about how to better protect investors, which also warned about Financial Darwinism: zealot born again Social Darwinism with the ethic of – survival of the richest.

The SEC is supposed to administer Dodd-Frank and the Volker Rule?  Really?  Consider current SEC lack of dedication to the enforcement of current significant regulations. For example the absolute lack of meaningful collateral behind Collateralized Bonds has not been disclosed, thereby committing: inadequate disclosure - a grave violation of law. Which then becomes: the omission of significant information - which constitutes fraud.

The SEC has no problem with Credit Default Swaps; which were not initially regarded as derivatives, ie., something that could be traded. Swaps were designed to furnish the illusion that the financial risk of complex investments could be insured against. The Commodity Futures Modernization Act, drafted by lobbyists and Wall Street lawyers for Phil Graham, termed the risk insurance Credit Default Swaps to avoid regulation (go around) by state insurance commissioners - that probably would have disallowed them because there were no reserves, and insurance requires meaningful reserves. So these were sham “contracts” called insurance and were also used as collateral, ie., “swap backed.”

Financial markets trade anything that can be securitized, and specialize in the too complex to explain; hence market makers discovered the value of trading Swaps - bets on insurance being paid or not.  How can the risk of 700 trillion dollars of unmitigated toxic leverage be reserved for!  How can Swaps provide insurance?  How transparent is fabreezed manure?

A Vice President of FINRA in charge of one of the largest districts, when we discussed Swaps asked me - how can nothing be shorted? And added he had no mandate to stop the madness.

Transparency will not improve anything. Derivatives will remain a mystery to the buyers (and apparently to their creators) – which make them illegal based on one significant Fed Bank Holding Company Bank regulation (out of over 1,500 pages of regs) which stipulates: complex investments to be sold must be explained well enough to be understood! And the sellers, so intent on continuing their ability to make markets for liquidity to continue to sell and trade derivates for fees produced a 325 page document to ostensibly provide comments to the Volker Rule. How naïve is it to accept this?  From a friend of 20 years who is a senior officer with the SEC, I know that the SEC considers the 325 pages a position paper from lobbyists.

Anyone who really cares about fixing what has been so wrong must speak out against the ability to continue to fabricate (innovate), make markets for and trade derivatives. And I do not know anyone who is not connected with derivatives, who is a rational liberal concerned for the common good, with an appropriate economic and financial background over 50 - who does not share this opinion.

We know recovering drug addicts are against drugs - some spend a life time trying to help get people off drugs. So if this logic applies – would it not apply to anyone involved in derivatives in the past who decided it was wrong to contrive financial investments that only produced vast amounts of fees at the risk of entire economies? Is it naïve to expect that people who formerly made a living from such toxic, virtual stuff to bet on, who decided they could not take it anymore – should become leaders to stop the betting madness?

The real issue is not transparency. It is not to make an Everest sized roulette wheel transparent. It is to separate the banks from investment banks and stop Trojan Megan Bank Holding Companies by returning to Glass-Steagall and the 1956 Bank Holding Company Act. The real issue is to put greed back into a cage, and get rid of derivatives – which add nothing to capital formation.

Never believe the Street propaganda that derivatives help manage risk – all empirical evidence is to the contrary. Derivatives only create geometric economic systemic risk and geometric fees for the greediest – the past is prologue! Hedging is what you do when you know what you are about to do won’t work. (From How We Got Swindled)

It is self evident Wall Street wants to divert attention away from the real issues. So to debate/parse the most functional ways to put rules in place for Dodd-Frank and to improve the Volker Rule is the diversion that is working.

In the final analysis – the acceptance of this diversion is fueled by gullibility and naiveté. (And all the money in politics.)

If you want to know what Wall St and Congress don't want you to know: 


Speculators are at it again, and our President's response at the beginning of March was to ask AG Holder to "reconstitute" the oil speculation task force.

On March 9th Exxon's CEO Tillerson observed to Matt Lauer on the Today Show: "I don't see gas prices topping $5." Per usual, scapegoats are to blame - it's "political risk."

And everyone knows the annual traditional summer price gauging gas festival is fast approaching: so Big Oil can celebrate its voracious appetite for profit gluttony.

Have you felt the pain at the pump? Doesn't it feel like déjà-vu? Remember 2008 when all the most important oil execs and investment gurus proclaimed all sorts of reasons for the spike in crude going to about $150 per barrel. Of course, Congress was bewildered.

Where has the Commodities Future Trading Commission (CFTC) been?

Remember herds of oil tankers were discovered circling off shore from ports waiting for prices to go up before landing to unload. Why, because speculators had cornered the market on oil futures. And then retrospectively it was concluded the blame for the speculation was the "Enron Loophole" created by the Commodity Futures Modernization Act of January 2000 which allowed commodities to be traded outside the jurisdiction of the (CFTC), which meant that the trading of commodities was no longer regulated or subject to anyone knowing what was going on.

June 21, 2008 - the Secretary of Energy under Bush, Sam Boardman said (lied) -- "there is no evidence of speculation."

By Sept 2008, Bernie Sanders rescued the truth by providing leaked "confidential" data (probably considered proprietary by all the lying speculators and market makers) - that it was, indeed, speculation.

So there was a media outcry, and on May 22, 2009 the loophole was closed by attaching the legislation to close the loophole to Farm Bill HR 2419. And true to form Bush, ever a man of the people and hand holder of Saudi Royalty, vetoed it; however, it was passed by a veto override.

SEC. 13106 Portfolio Margining and Security Index Issuers gives authority to the Chairman of the Fed, the SEC and the CFTC to take appropriate action - (WHERE'S THE ACTION?). Think about this: Gary Gensler, the chairman of the commission, is a former Goldman Sachs Partner and responsible for oversight of oil speculation/commodity speculation as well as derivatives. The chairman of a regulatory commission should not need to be asked to become involved. So why must Justice get involved - because our regulator failed!

Why do so many regulators who formerly were either partners or CEOs of Goldman fail to protect us?And why would any President appoint anyone from Goldman considering all the empirical evidence of their consummate protection of the markets and not the public. The word market is code for Wall Street's self interest and sociopathic greed. Clearly our economy has been devastated by all the deregulated and unfettered unbridled greed - and oil prices are more of the same, unless you have faith in the analysis of Exxon's CEO.

Where is the SEC? Is it OK to manipulate markets? Don't think the Volker Rule will materially help! The SEC obviously has a mission to provide liquidity for market makers for traders to engage in making markets for unbridled speculation, ie., geometric volatility.

It must be OK to manipulate because innovated financial-structured investments - like 700 trillion dollars of derivatives now loom over us like a giant hydrogen (H Bomb) bomb! Silently waiting for one hiccup in the virtual surrealistic world of virtual values underneath an Everest sized inverted pyramid of 40 times the virtual value.

How is the Volker Rule going to help when will be administered by the SEC? The Rule fictitiously contends it will strengthen compliance and tighten (the fallacy of) risk management by math? What - better quantitative equations to measure the qualitative essence of subjective risk. The sure way to lower and measure risk is by having more cash and less leverage. But that's not what will happen and not what is happening.

The US is now exporting more oil than ever, and demand for gas is way down world-wide due to the 2nd worst economy in the US since 1776 - and even worse in so many other developed countries. Incomes and jobs are down, so consumers' ability to pay for gas, and heating oil, is lousy.

The media has not delved into the obvious nature of the speculation, but reports what others observe and stays away from the real issues. And where is the outrage from the American public? Is it believable that oil analysts, people paid by Wall Street to provide 3rd party influence to sell securities, are right this time - concern for political disruption, the price is fear-based? The role of the 4th Estate is to objectively create informed public opinion - and this has not been the case, although Americans seem to be oblivious of reality.

How can Gensler (the anointed fox) be in charge of protecting anyone other than his ex partners' best interests? Why has the CFTC not already curbed this new round of oil speculation! Come on! There is no reason for a task force, just have Justice investigate the CFTC.

Gensler formerly was a principal advisor to Robert Rubin, when Rubin was Goldman's CEO. Rubin, as Clinton's Treasury Secretary, petitioned Clinton to participate in deregulating greed and then joined Greenberg at Citi; and Gensler later served as Larry Summers chief advisor when Summers was with Goldman. Summers followed Rubin as Clinton's Treasury Secretary and was a staunch supporter of Greenspan and leading cheerleader for the deregulation of greed. Then Obama appointed Summers as his chief economic advisor - do you get this, I do not! And Gensler, as the Chairman of CFTC, will be instrumental in policing the Volker Rule - the commodity markets - aided and abetted by other commission members, some with conflicts and others who have only served in different governmental capacities - where is the Dali painting of this surrealistic model for failure? I would vote for Dali's painting titled, Persistence. (google it)

Romney thinks the free markets will resolve everything - let Detroit go bankrupt, let all the houses (homes) go into foreclosure, continue to innovate toxic derivatives - let the markets resolve these problems -- and he is the leading contender for the Republican nomination to run for president? While the media sits silently listening to the same market lies that led to our current economic disaster - which now cover up all the oil speculation.

So we can sleep better knowing it is not speculation and that H Bombs are not really financial. Who cares, lots of people still have money for gas and jobs, and so what if we prefer to not be informed. Or critically examine preposterous excuses and denials.

E. Henry Schoenberger, is the author of How We Got Swindled by Wall Street Godfathers, Greed & Social Darwinism ~ The 30-Year War Against the American Dream, with a foreword from David Satterfield, the former business editor of the Miami Herald, and 2 time Pulitzer Prize-winner.
To know more about the failures of regulators:

Friday, January 13, 2012


Here we are in 2012 and Wall Street’s “structured investments’’ are still out of control. Unfettered free Markets reign!

At a time when political candidates talk about the need for jobs and investment, Wall Street continues to focus on ensuring that its high-stakes poker games go unregulated. 

The SEC defines structured investments under Rule 434 as: “Securities whose cash flow characteristics depend upon one or more indices or that have embedded forwards or options or securities where an investor’s investment return and the issuer’s payment obligations are contingent on, or highly sensitive to, changes in the value of underlying assets, indices, interest rates of cash flows.”

No wonder structured investments are hard to control – nobody really understands them. But that didn’t stop people like MF Global’s Jon Corzine, Lehman’s Dick Fuld, and does not other Wall Streeters from manufacturing these investment “products” to produce revenue for their firms. Do product liability laws apply to these products?

Jefferson, in a letter to Albert Gallatin, Treasury Secretary in 1802, said: “I believe that banking institutions are more dangerous to our liberties than standing armies.”

Everyone should know something about what has happened to our economy and society stemming from all the too complex to explain exponentially leveraged “securities.” And the greed behind all the structuring is still going on without meaningful restraint as we enter a new year. At least Occupy Wall Street is persistently protesting in the shadows of the Wall Street glitzy office buildings.

Protest is the only way to change the essential inhumanity of so much greed. Plutarch said: “An imbalance between rich and poor is the oldest and most common ailment of all Republics.”

Occupy Wall Street has led the way to a new awareness of the feelings of betrayal and being left out of the American Dream caused by the drive to grow net worth by the few against the best interests of the many. Financial products such as structured investments do not lead to capital formation that is required to create jobs.

And in 2012 there is a need to have the right conversation about the right to produce structured investments that may have $600,000,000,000 of leveraged derivatives, which defy rational explanations, just waiting for a new hiccup to explode – or is it implode?

Wall Street was instrumental in the development of our country. Wall Street raised the capital for industrialists to invest in plant and equipment and innovative ideas which created the strongest economy of all time. It helped produce the middle class and could help to resurrect it if it had the will. Why could Wall Street not put risk capital into American manufacturing rather than geometrically leveraged virtual value? Why not stop all the leverage, which generates huge fees in the short run, but puts our entire economy on the line?

Why can’t Wall Street take the lead and make money the old fashioned way – not at the expense of the people but to rebuild the lives of the 99 percent.

How can the Republican debaters’ and the media wonder how to rebuild trust? Trust in what – in a government that has failed to protect the public? Trust in banks that only care about structuring investments – so complex that the SEC definition is so arcane that only a few know what in the hell it could possibly mean?

Samuel Adams said: “It does not take a majority to prevail…but rather a tireless minority keen on setting brushfires of freedom in the minds of men.”

The Tea Party is an example of setting brush fires. However, its mission is to keep brush fires burning to obstruct passing the budget, or to avoid passing Obama’s jobs bill, or to get rid of health insurance for Americans who did not have access. These brush fires have been set to interfere with the freedom to care about the common good and our Government’s obligation to protect it.

Occupy Wall Street is a minority too. But its ethic is a function of restoring equality and fairness to the American Dream. We cannot allow unbridled, unfettered greed to permit the creation of “structured’’ financial products without investing in jobs or in capital formation. OWS certainly does not mean freedom for Congress to continue to be: of the lobbyists, for the ultra rich and by the ultra rich - who are the generals of the Mega Banks and the Corporations that ship jobs and profits off shore.

Jefferson noted: “The legitimate powers of government extend only to such acts as are injurious to others.” This was before germs, or automatic weapons, or nuclear bombs, or planes or the internet, or capitalism or 350 million Americans living on a globe with billions of people, connected to each other by laptops and facebook – and Huffington. So we need to view Jefferson’s profound concern for the public good in terms of today. We did manage to create the American Dream, but the deregulation of greed and the devaluation of ethics has become injurious to the 99 percent.

So now we have a new year, and a new election. And it is time to focus on the needs of the 99 percent and tear down party lines and obstructionist tactics. The truth is simple: It is time for all Americans to come together to understand that all the Greed and self interest is wrong. We need to fix it.

Congress along with Wall Street can step up to the line to do what is right for the people if there is a willingness to understand the reasons behind the brush fires, and go back to the basics that made our country great.


Tuesday, January 3, 2012


How is a 6.3 “billion dollar bet” – “prudent?” That’s what Corzine testified.

He, “always tried to do the right thing;” he placed the bet to make money because IM Gobal needed to become profitable, he testified. So he bet the store on the direction of the currency of five countries. There was “no intent” to do the wrong thing – or misplace $1,200,000,000 of customer funds – it was just “chaotic.” No admission of anything that could be construed as fraudulent behavior – just the empirical evidence of reality.

Is this acting in good faith toward his fiduciary responsibility to customers? Let alone to his clear legal obligation to not co-mingle customer’s funds? Funds which probably went down the drain to cover his positions going the wrong way.

Corzine is only testifying to set up a fraud defense, because prosecutors must prove willful intent – and Corzine is a man of prudence, as a former CEO of Goldman.

So huge leveraged betting on currency is not intentional, and is the right thing to do? Hedge fund managers know currency bets are at the highest level of risk. Speculation is never prudent, but volatile. More leverage equals geometrically more risk and more volatility.

Capitalism is on trial because of the way it is practiced at the expense of prudent behavior, and because so many Capitalists do not act in good faith.

To Act in Good Faith is a legal term and concept well defined by many areas of the law and established precedent. Simply put - it is an implied covenant of fair dealing and not breaking (keeping) your word. Significant SEC and Fed Bank Holding Company regulations stipulate the legal import and requirement to Act In Good Faith – which must be adhered to as significant regulations have the force of law behind them.

So where has acting in Good Faith gone?

The Lehman Bankruptcy in September of 2008 was the largest ever in US history. The Federal Bankruptcy Court just approved a plan to emerge from chapter 11 for 65 billion dollars, but the fighting for assets and valuations is not over.

Lehman leveraged itself to death, and when the market hit the fan on September 8, 2008, by the 10th it was clear that Lehman could not sell – flip all the egregiously leveraged and worse than junk bond debt it assumed it could always sell – no matter what?

Different suitors stepped forward to ostensibly buy or bail out Lehman. However, it became clear Lehman had manipulated an accounting of financial risks, replete with fictitious valuations through Hudson Castle, an entity set up to get the bad stuff off Lehman’s balance sheet. So with a myriad of other material issues – Lehman declared bankruptcy. The stock price now hovers at .025 cents.

Lehman Brothers did not practice Good Faith. And the Federal Bankruptcy Judge appointed an attorney from a prominent legal securities defense firm as the court’s Examiner.

The Examiner’s lengthy report reads like a brief in defense of Lehman. Jenner and Block, where Anton R. Valukas, the court appointed “Examiner,” is a very senior partner with a high profile national public record of defending actions alleging “breach of fiduciary duty,” and “securities fraud.”

The Examiner’s report concluded: “…there was insufficient evidence to support a colorable claim for breach of Fiduciary Duty regarding Lehman’s valuation errors (lies?) ... there was insufficient evidence that any Lehman officer acted with the necessary SCIENTER to impose liability.” Further the report concluded that Lehman had a “license to fail.” Which “establishes a future precedent” according to the Center for Policy and Research. What an examiner, what a business builder for future securities defense work.

Scienter refers to intent or knowledge of wrong doing.

Lehman advanced the ridiculous and implausible notion that when it doubled its risk from $300,000,000,000 to $630,000,000,000 the “630 Billion" was still acceptable risk;” because it was “prepared to lose $4,000,000,000 instead of $2,200,000,000.  Does this ring true?

Because, Lehman was “prepared to lose” (not investors), the Examiner did not consider this as “reckless behavior.” OK then – unbridled, geometric leverage to speculate in nuclear volatility is not reckless. Thank God for an Examiner with enough uncommon sense to let Lehman off the hook because it was prepared!

In fairness to Lehman it had backed up its risk – hedged it! Hedged 40 times its fictitious net capital, or possibly a higher multiple, an even more specious posture toward acceptable. Don’t forget September 2008 marks a date in history when it became public knowledge, for the first time, that financial engineered risk management was a cruel joke and clearly did not work.

Hedging is what you do when you know what you are going to do won’t work.

The Examiner’s extremely subjective value judgment (which read more like a legal defense) was: Lehman’s risk reword ratio was justifiable. Because the reward justified the risk – he concluded, “The rewards outweighed the risk.” And this conclusion from one of the most prominent security defense attorneys in the US establishes a precedent which could then be applied to any Bank Holding Company in the future that dies from gangrene due to a bowel explosion stemming from all their “manageable” and “worth it” mathematically risk measured, insane leverage.

Here’s a taste of Lehman’s not fraudulent practices: more than doubling its balance sheet valuation of Archstone - 2 times above market value; CDOs (“collaterized debt obligations)– termed asset backed securities, backed with either Swaps or pools of worse than junk bond real estate loans – had no real collateral considering any financial standards for what constitutes acceptable collateral for any bank in the US; fallacious accounting and the lack of collateral was not disclosed to investors, a severe violation of disclosure regulations; and the glaring lack of disclosure constitutes the “omission of significant information.” Further the Examiner found that as the economic downturn worsened Lehman consistently flagrantly inflated the value of its assets; while it continued to grossly overstate its expected (projected) return on investments. So was this accidental – because it was not intentional, as the Examiner has to conclude to let Lehman off the hook.

And Lehman was not alone in 2008 in their usual and customary business practices just described. But Paulson and Congress made certain that our government bailed out Goldman and its (investors) counter parties, along with the other culprits.

The Examiner’s report was justified, because THE CENTER FOR POLICY RESEARCH furnished the 99% with an Oversight Report of 33 pages. This is a Seaton Hall Law School “think tank?” and Mark Denbeaux, the Law Prof in charge – “…could find no legal reason to charge Lehman with misconduct.” Of course, the Seaton lawyers pointed out that their opinion was, “Pursuant to the standard practice of the Center…”

No legal reason: fallacious-fictitious risk management and fictitious valuations as policy. To disguise - conceal the true value of assets and the actual nature of unbridled purely speculative risk? No legal reason? How about the lack of disclosure and the omission of significant information!

There have been a number of articles recently on these findings and the emergence of Lehman from chapter 11. It is amazing how the ability to conduct critical thinking regarding the issuance of reports and legal conclusions is apparently missing in action. Acceptance of so called experts is what got us into this mess. Acceptance of Econ PhDs return to Laissez-faire theories designed to promote fees for the ultra rich rather than sanity and fairness is still the rule.

To Act in Good Faith is missing in action. As well as any critical analysis of so-called “risk management.”

It is not logical to mathematically measure risk because risk is subjective and qualitative; therefore can not be quantified. The Examiner supported the gravitas of virtual mathematical risk measurement by noting and seemingly condemning – “…Lehman valued these investments through gut feelings.” And their guts (based on greed) regarding unmitigated leverage were legally justified because they (Lehman) - “were prepared to lose.”

And Corzine testified his “bets were prudent.”  Just like bungee jumping without a cord.

The inscription on the tombstone of our devastated economy and the middle class should read – The rewards outweighed the risks. To Act in Good Faith is DEAD!



The stock market formerly was a place where savings were invested in corporate growth except for times in the past, like the events leading up to the Great Depression - when unbridled speculatio and greed ruled. Many corporations, still alive today, were started by Wall Street Financiers.

 Financiers helped innovators like Thomas Edison and Henry Ford obtain the capital they needed to build their companies and sold stock to raise capital. Shareholders understood why they were investing and knew there were risks that could not be guaranteed. Shareholders accepted risk investing in ideas or men who had ideas – which if successful would result in expanding companies which produced products in demand, and the companies along with their stock price, and dividends would grow in value.

So the Stock Market used to be a market which raised money for and sold shares in new companies or was a market to trade in existing investments called securities - which could be either bonds or stock.

And the process works when investment is real rather than financial.

Real investment produces improved, more productive, and more innovative plant and equipment which lead to increased GNP. Real is different than financial, because financial investment may only be reflected by a larger or lower personal income or net worth which is not translated into economic growth.

We have lived in a forward looking economy, and counted on the free market myth to push everything up. Personal savings for some time have not been invested in the growth of corporate values translated into dividends for shareholders. And corporate profits, for too many years, have not been invested in corporate growth, but have been paid out to CEOs and upper- level executives at an accelerated pace for the past thirty years, while necessary cash was borrowed. This equation works as long as everything goes forward, meaning up. So, as investments became more financial than real our markets turned into casinos where shareholders bet on the direction of stocks, or indexes, or anything that could be securitized to bet on.

A similar misdirection of savings occurred in the late 1920s when the stock market soared and “investors” gobbled up stocks on margin (LEVERAGE) in order to have a larger- than-life position in the market while stock prices soared due to unbridled greed and unfettered speculation.

When Wall Street’s stock market specializes primarily in complex (too complex to explain therefore too complex to understand) financial instruments, real investment is lost is the frenzy of an infinitely speculative, feverish and dogmatic pursuit to manufacture fees and bonuses.

 The stock market is now for the benefit of Wall Street Godfathers, who have little concern for what happens to investors’ savings except for the conversion which has taken place for many years – the conversion of investor savings into Wall Street Godfather family pockets.

Clearly - capital formation has been replaced by fee formation. And “financial masturbation” reigns supreme. This is a concept I raised in Invest for Success...which holds that masturbation is OK as long as you do not want to create anything real, but if you expect to achieve real financial results of substance in the future then it is not the right approach, and as I observed in 1990: “If the stock market becomes an arena of financial masturbation, then our economy suffers, as real investment is lost in the mad scramble to shuffle dollars.”

All the firewalls are gone. Wall Street achieved a great victory at the expense of our economy and the financial lives of millions of Americans.  Banks were the cohorts of Wall Street in the 20s and since 1999 (aided and abetted by Congress)   have been joined at the hip again.

Shortly before the book’s publication the OWS Movement began. It is not against Capitalism, but against how the misuse of Capitalism has caused so much financial displacement and anguish. Adam Smith, author of “The Wealth of Nations and a professor of Philosophy , postulated that Capitalism was supposed to be of benefit to society as a by product of a Free Market economy. However, the freedom has clearly been abused, because unfettered Greed knows no boundaries.

So is capitalism broken?  This is self-evident. 

Answers to correct the misdirection of capital from real investments to nothing but egregiously leveraged financial innovation to produce “structured investments” for fees are known. If Congress has the will and we the people vote out all who do not get it.

Our Government must find the will and integrity to rebuild the barriers against Greed by separating the banks from the investment banks; by restricting the ability to form bank holding companies (which results in down sizing) and the will to require banks to be lenders again, and disallow the ability for any bank to issue (to contrive is illegal) complex instruments.

Occupy has started the right conversation.  And there is a growing of fear of this desperately needed conversation and of OWS. which will not go away. And the reasons should be clear to anyone who cares about truth and the common Good and truth. For Wall Street it is the fear of losing their money machine; for Congress losing the hands that feeds, and for Big Business losing the ability to feed Congress.

For anyone that cares about the common good there is nothing to fear.

Excerpts from:  How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream; foreword by David Satterfield former business editor of the Miami Herald, 2 times Pulitzer Prize winner.  To know more:

Thursday, December 1, 2011


Public universities: another casualty in the War Against the American Dream.

California has raised tuition precipitously since 2008.  And the college students, children of the middle aged 99% are trapped in student loans and the doubling cost of education without jobs waiting at the end of the tunnel.

So there has been unrest on all the California campuses for some time. UC Davis was the final straw in a cauldron of unrest that has been brewing.  However, this cauldron, even seething volcano of hurt has manifested itself as passive assemblies of students trying to bring their fundamental problem of getting educated to light in a world that has turned away. 

 Can the Chancellor merely apologize? And the two policemen whose pictures are forever indelibly ingrained in the minds of all who care, can they merely be suspended with pay? Is assault still illegal?

How has the betrayal of California students been addressed?  How have all the justifiable feelings of not being able to deal with the growing weight of student loans been responded to? With controls established by California “Chancellors of Education” to keep the unrest at bay; to keep the peaceful assemblies dispersed so no one will know. 
And Campus police in true SS style have now responded to orders by spraying mace/pepper spray - sprayed directly in the face of what could have been your child – pepper sprayed all over peaceful human living bodies quietly sitting, arms locked in a field. 
Orange is the color of the newest level of the war. And Clockwork Orange is no longer in the future just like 1984 foreshadowed GOP Doublespeak.

Don’t think it was only the two deranged campus policemen who were at fault. Just like it was not only the child molester at fault on Penn State’s storied football coaching team. The two deranged robotic sprayers were surrounded by their uniformed brethren who did nothing to protect students being maliciously attacked. Just like so many at Penn State sat quietly on the sidelines because the Penn State tradition of college football greatness was more important than lives of a few kids.

 Until the Occupy Movement,  started by our newest generation of college students, the conversation in this (our) country was about “deficit reduction” and we can’t tax the “job creators” along with the validity of our President’s birth certificate and country of birth – and of course the sacred pledge to Grover! 

If the barriers against greed had not been torn down; if the SEC and the Fed had enforced regulations against fraud and against “complex financial instruments” too complex too explain – would California have run out of funding for some of the best and least expensive public universities in the country? If Congress had not courted the lobbyists and done its job to protect the public would we now be concerned for how we are now on the road to a police state where the 1st Amendment is being violated everyday on television by mayors and armies of riot police – and now campus police. I thought police were to protect the public, just like Congress.

So now there is a new Rodney King moment in California, and in cities around the United States of America riot police are more concerned about containing valid American Protests – than arresting the perps watching from their glitzy towers of ultra wealth. We have seen bloodied students in NYC and young women clubbed, sprayed in the face and dragged who have been engaged in peaceful protests. Grandmothers shoved around, protesting the lack of jobs and 45,000,000 Americans below the poverty line.  Something that does not resonate in the Hamptons, and is not covered in Town and Country.

An awareness of the fact that most of us are the 99% is spreading which has caused the big banks to start a $1,000,000 fund to fight back against the movement, as reported, ironically, by Bloomberg.  Bloomberg also reported that it found out, by persistent digging, that the Fed has given banks an extra 1.2 trillion dollars over the last few years – and not just American banks. Being the mayor of NYC is not simple but Wall Street rules.

The dots are beginning to come together.

The Super Committee failed. And on Monday, Jon Kyl, a leading GOP humanitarian, told Carol Costello on CNN – “that Grover was not happy” the Repubs had agreed to increase (?) taxes to try to look like they were more interested in the country than in getting rid of Obama, by doing nothing about our depression.  But the taxes were not for incomes above $500,000 or even above $1,000,000, because  Kyl  so brilliantly reasoned, that would be against the “job creators.”  I applaud Carol Costello for being among the few to push a GOP spinner to the wall, but am still waiting for someone to skewer a member of the GOP Groverspeak group by simply asking – where is there one shard of evidence that lowering taxes has produced jobs, or that taxing incomes of $1,000,000 could kill job creation?  The job killing lie is no different than the trickle down one.

All the abuses of the 99% are related. And orange spray makes it crystal clear how little concern there is for how badly life stings for so many trapped in lives canceled by the return to Social Darwinism which has morphed into Financial Darwinism.

So this year Thanksgiving will not be the same and the red and green of Christmas has been replaced by orange. 

E. Henry Schoenberger is the author of How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism ~ The 30-Year War Against the American Dream – with a foreword by David Satterfield, former business editor of the Miami Herald, 2 times Pulitzer Prize-winner. Schoenberger posts on Huffington Post -Henry Schoenberger .To learn more:  To buy the book: at Amazon's eStore: