The New Robber Barons
The New Robber Barons
How Bankers Created an
International Oligarchy
Janet M. Tavakoli
Copyright © 2012 by Janet M. Tavakoli. All rights reserved.
Published by Janet M. Tavakoli, Chicago, Illinois
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Limits of liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special incidental, consequential, or other damages.
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Library of Congress Cataloging-in-Publication Data:
Tavakoli, Janet M.
The New Robber Barons: How Bankers Created An International Oligarchy / Janet M. Tavakoli
ISBN-10: 0985159006
ISBN-13: 978-0-9851590-0-9 (Electronic)
BOOKS BY JANET TAVAKOLI
Credit Derivatives & Synthetic Structures, John Wiley & Sons (1998, 2001). Also available in Japanese and Orthodox Chinese.
Structured Finance & Collateralized Debt Obligations, John Wiley & Sons (2003, 2008).
Dear Mr. Buffett: What An Investor Learns 1,269 Miles from Wall Street, John Wiley & Sons (2009). Available in English, Orthodox Chinese, simplified Chinese, Japanese, Portuguese, and Turkish.
The New Robber Barons, Janet M Tavakoli (E-Book compilation of articles from the 2008 financial crisis to January 2012).
Coming Soon
The Money Book (non-fiction 2012) – Tavakoli pierces the fog and predicts what you should buy and sell to take advantage of global financial turmoil and when to shift your investment strategy.
Archangels (E-book 2012, fictional financial thriller).
ACKNOWLEDGEMENTS
I would like to thank the many people who offered comments, encouragement, and suggestions. In particular, I would like to thank Libby Fisher Hellmann. Without her generous encouragement and advice, this compilation would never have been completed.
Some of these articles, particularly the later articles have appeared on the web and a few have been prominently featured on the front page of the Huffington Post. Arianna Huffington and the professional staff at the Huffington Post have handled every question and request at the speed of light. “Tyler Durden” at ZeroHedge.com, Barry Rithotlz at The Big Picture (Ritholtz.com), Henry Blodget and the team at Businessinsider.com, Karl Denninger at Market-ticker.org, the team at FT Alphaville, the blog at the Wall Street Journal, the team at New York Times’s Dealbook (dealbook.nytimes.com), Michael Shedlock (globaleconomicanalysis.blogspot.com), Andrew Tobias at Money and Other Subjects (andrewtobias.com), Robert Wenzel (economicpolicyjournal.com), Ron at Wall Street Pit Group (wallstreetpit.com), “Arthur Cutten” at Jesse’s Café Americain (jessescrossroadscafe.blogspot.com), Steve Megremis (dailybail.com) and many others have honored my work by sharing some of their web real estate to feature, excerpt, quote, or comment on it.
I would also like to thank Nancie Poulos, Arturo Cifuentes, Hilary Till, Pamela van Giessen, William J. Mikus, David Pelleg, Edward Stone, Nancie Poulos, Jim Rogers, J. Allan Meyer, and Rita Ilse Guhrauer. I would also like to thank the many people who did not wish to be named but who acted as mutual sounding boards.
No opinions or theories presented in this book necessarily represent those of the people I have thanked. I am responsible for any errors, statements, interpretations, or conclusions.
About The New Robber Barons:
With Trillions On the Table Nobody Plays Fair, and Everyone Plays for Keeps.
Tavakoli’s on-going chronicle of the global financial crisis exposes the criminogenic environment that enabled international oligarchs to solidify power.
In January 2009, Warren Buffett, CEO of Berkshire Hathaway, told Tom Brokaw: “the idea that people that move money around are some favored class…strikes me as getting pretty far away from where we should be.” Two years later he publicly excused apparent insider trading by one of his successor candidates, David Sokol.
Berkshire Hathaway officer Charlie Munger admonished law students that Americans shouldn’t be "bitching about a little bailout."
Shortly before Congress confronted him with Goldman Sachs’s profiteering during the financial crisis, Goldman CEO Lloyd Blankfein quipped he was doing “God’s work.”
CEO Jamie Dimon told shareholders that he didn’t think JPMorgan made a mistake when it came to potential foreclosure fraud: “maybe we’ll have to pay penalties eventually to some of the attorneys general but we really think we should just continue.” Meanwhile the bank scoured 115,000 mortgage affidavits and reserved $1.3 billion for legal costs.
After MF Global’s October 31, 2011, bankruptcy a U.S. Congressman told former CEO Jon Corzine: "You've got thousands of hard working people around this country that feel cheated."
Tavakoli serves up example after stunning international example of no-strings-attached socialization of losses and privatization of gains. In the words of Congresswoman Marcy Kaptur: "I believe most of us would call that theft."
Contents
PREFACE
CHAPTER 1
Bailouts for the Oligarchs
Proposed Alternative to (the Various Versions) of the Paulson Plan
(The Emergency Economic Stabilization Act of 2008) - September 25, 2008
Selling Democracy On the Cheap - September 30, 2008
Ponzi Schemes and Stress Tests - May 8, 2009
Wall Street and Washington Hope You Are Gullible: Disappoint Them - February 14, 2010
2012: Voters Nix Incumbents, Demand Financial Reform and Fed Fraud Audit - July 1, 2010
Wall Street’s Advice to Joran van der Sloot (satire)
June 8, 2010
CHAPTER 2
Goldman Sachs’ Definition of “God’s Work”
Jamie Dimon and Warren Buffett Were Warned AIG Had Serious Trouble One Year Before the September 2008 Crisis (and Goldman Sachs Knew Too) – January 26, 2010
AIG Paying Out Millions in Bonuses - March 14, 2009
Did AIG Insure Dodgy Mortgage Products for Goldman Sachs? - March 25, 2009
AIG Bubble: Irrational Exuberance - August 28, 2009
Goldman’s Lies of Omission - October 28, 2009
Goldman Sachs: Reasonable Doubt - November 2, 2009
I Apologize to David Viniar and Goldman’s Lawyers and Call for More Regulation of Goldman Sachs November 5, 2009
Goldman’s Undisclosed Role in AIG’s Distress
November 10, 2009
I Retract My Apology and Call for More Regulation of Goldman Sachs - November 22, 2009
Responding to Goldman Sachs - December 25, 2009
AIG Continued to Write Risky CDO Protection After 2005 [Lewis and TIME are Incorrect.] – March 20, 2010
Goldman CEO Lloyd Blankfein to Treasury Secretary Hank Paulson: “OK, Now What?” (Humor) – August 23, 2010
Goldman Sachs: Bullies on the Block - September 13, 2010
Goldman Sachs Sued by German Bank Over Davis Square VI, an AIG CDO Bailed Out by Taxpayers - October 5, 2010
CHAPTER 3
Caveat Emptor
BofA Says Merrill's Huge Hit was in December (Not November)?
The China Syndrome and Dead Man's Curve Suggest November - January 26, 2009
Merrill's Murder/Suicide - February 7, 2009
Ken Lewis Must Go - April 24, 2009
Bank of America’s Shareholders Should Reject Bonus Plans - January 12, 2010
JPMorgan’s Losses From Indecent Exposure - August 9, 2010
Jamie Dimon and Robert Rubin: Evasive on "Fraud as a Business Model" – November 12, 2010
The Biggest Headache for Investors in Groupon and Facebook - March 3, 2011
Mark Zuckerberg’s Value Problem: “My” Facebook Profile Was a Fraud, So Was “Warren Buffett’s” - July 14, 2011
CHAPTER 4
Gold and Silver: Glaring Irregularities
Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold - March 8, 2010
Washington Must Ban U.S. Credit Derivatives: Games and Gold (Part 2) - March 12, 2010
How to Corner the Gold Market - March 30, 2010
Gold Game Changer: J.P. Morgan Accepts Bullion as Money - February 7, 2012
Today’s Silver Scandal - May 5, 2011
Price Manipulation: Look for Motive - January 19, 2012
CHAPTER 5
Criminal Behavior: Beyond Justice
Madoff Deserves Lots of Company - December 13, 2008
Premise of Fortune Cover Story is Incorrect (There was criminal behavior.) - January 11, 2009
Investment Fund Managers: Nine Warning Signs - February 9, 2009
Wall Street’s Fraud and Solutions for Systemic Peril - September 29, 2009
Banging the U.S. Stock Market - May 10, 2010
IKB’s CEO Found Guilty of Market Manipulation—Some U.S. Bank CEO’s Should Also Face Charges - July 16, 2010
CHAPTER 6
Pundits and Junk Science
Reporting v. PR: Meredith Whitney and AIG - March 23, 2009
Taleb Kills $20 Billion Mythical Swan – June 1, 2009
Taleb’s Stranded Swan? – June 3, 2009
Gasparino’s Glass Jaw Was CNBC’s Draw - July 22, 2009
Where Were Drama Pundits [Whitney, Taleb and Gasparino] When It Mattered? - July 29, 2009
Michael Lewis: Junior Salesgirlieman – March 15, 2010
Wealthy Patriots Wage Class War - December 12, 2011
CHAPTER 7
Politicians Inaction
President Obama's Right to Free Speech - May 10, 2009
Washington’s Bipartisan Betrayal: The 2015 Global Financial Crisis – December 31, 2009
CHAPTER 8
Rating Agencies
Revoke Rating Agencies’ NRSRO Designation for Structured Products - September 17, 2009
Ackman Versus Wall Street’s Ponzi Scheme - May 4, 2010
Tavakoli Structured Finance Revokes Credit Rating Agencies’ NRSRO Designation - July 26, 2011
CHAPTER 9
Fannie Mae and Freddie Mac
“Fraud As a Business Model” - September 6, 2011
CHAPTER 10
Warren Buffett’s Twist: “Please, sir, I want some more.”
Warren Buffett’s Wall Street War - October 20, 2009
Warren Buffett, Stop Using My Credit Card! - November 23, 2009
Warren Buffett and Charlie Munger: Winning the Class War - September 21, 2010
Buffettgate: An Unenforced Policy Isn’t a Policy - April 6, 2011
Warren Buffett and the Boys of Wall Street - May 9, 2011
CHAPTER 11
The “Regulators”
Inside the Wall Street Journal’s Future of Finance Initiative - December 14, 2009
Treasury Cover-Up of Goldman’s Role in AGI Crisis – December 22, 2009
Timothy Geithner, I Call Your Bluff - January 7, 2010
Show Bernanke and Geithner the Door - January 22, 2010
Congress Exposes Profiteering in AIG’s Deals: Delay Enabled Cover-Up - January 28, 2010
Congress’s FCIC Nearly Nailed Former Citigroup Executives to the Wall—Then Blew It - April 8, 2010
President Obama: Bring Back William Black - April 25, 2010
CHAPTER 12
Media Circus
ProPublica’s (and NY Times’) “Untold” Magnetar Story Creates Excuses for Wall Street and Washington - April 19, 2010
Tavakoli’s Top Ten Business Books (satire) - December 13, 2010
Blame the Victims and Enrich the Perpetrators - January 13, 2011
2011: The Year 60 Minutes Misled Americans About Municipal Bonds – December 20, 2011
CHAPTER 13
The Eurozone
Wall Street’s Advice to the IMF: Control Your Alleged Rapists! (satire) - May 22, 2011
Euro Endgame - June 1, 2011
“Standard” Credit Default Swaps on Greece Are a Sham and It’s Not a Surprise - October 27, 2011
CHAPTER 14
MF Global Implodes: Ongoing Global Crisis
Credit Derivatives and Leverage Sank MF Global – November 4, 2011
MF Global Revelations Keep Getting Worse - November 21, 2011
Is Crony Capitalism Wrong? - December 3, 2011
Corzine Dodges the Fraud Question - December 9, 2011
Rehypothecation Is An Old Story: MF Global’s Story Is a Different Story of Filched Funds - December 16, 2011