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Do Summers, Geithner and Bernanke Have to Share Credit for Saving the Banks with Drug Kingpins?
I have repeatedly criticized Summers, Geithner, Bernanke and the
rest of the boys for their approach to "saving" the too big to fail
banks. I have argued that they are trying to paper over the banks' real
problems instead of fixing them.
I have pointed out that the giant banks may still be insolvent - even after all of the money which the fellas handed them - demonstrating that:
(1) The giant banks have repeatedly gone bankrupt in the past due to speculative bets, and the government hid the insolvency
(2) The too big to fails have used "creative accounting", and may still be in big trouble. I've repeatedly noted
that the giant banks have huge liabilities hidden off-balance sheet in
"structured investment vehicles" and are using mark-to-moon accounting
valuations to pretend that their toxic assets are worth enough to keep
them in the green. As one of the engineers of Britain's efforts to
rescue its financial statement reminded us last week:An
IMF study showed at the middle of this year that banks had only
declared half their losses on their books: we have a long way to go.
But
let's be optimistic and assume that the giant banks have really made it
through the crisis. We can congratulate Summers, Geithner and Bernanke,
right?
Not according Antonio Maria Costa.
Costa is the head of the UN's Office on Drugs and Crime. He says that what saved many banks during the height of the financial crisis was drug money:
"In
many instances, the money from drugs was the only liquid investment
capital. In the second half of 2008, liquidity was the banking system's
main problem and hence liquid capital became an important factor," he
said.Some of the evidence put before his office indicated that
gang money was used to save some banks from collapse when lending
seized up, he said."Inter-bank loans were funded by money that
originated from the drugs trade and other illegal activities ... There
were signs that some banks were rescued that way."
So even if the banking system really has stabilized, Summers, Geithner and Bernanke cannot really take full credit.
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It's like a Cheech and Chong movie, called "Collateralized Bong Obligations Rock!"
Seriously, drug money is seriously fungible, it greases everything. It gets invested across the globe. One of the great things about an opaque over the counter market is that the only requirement for participants is that they have a pulse and a bunch of dough. It brings all the illegally acquired money in the world into play. Unregistered entities with ties to organized crime or drug cartels are playing in the OTC market, and buying CDS contracts to hedge those bets. This is one of the big stories legislators are desperate to keep from getting out, because REAL oversight of that $600 trillion dollar casino would mean game over and the big banks have spent hundreds of millions on lobbying to make sure the secret room remains big enough for the game to go on. They have succeeded in that effort.
Wait. What was I saying?... Oh, yeah. Drugs are good!
when I lived in Bay Area, in the 80s, a number of regular folks told me that BofA had avoided bankruptcy due to latin american defaults by laundering drug money big time, and in Florida I have heard bankers say if drug business shut down banks would be insolvent instantly . In both cases they mentioned "private" banking was where money laundering occured. Have no idea if this gossip buzz was remotely true, but from my expereince these kinda-open secrets tend to get proven out...there were jokes about priests and alter boys long before public law suits, media coverage, there were many rumors abotu Tigers ways before MSM, general public knew for sure etc....
I know this is a stretch, but it always seemed Paulson was more than "please take care of my rich buddies" desperate when he kneeled down to plead with Pelosi for TARP money, he seemed scared desperate, like his life depended on it....
I think our banking system is mobbed up...more than we will ever likely know.
Look even the CIA needs a bank. Come to think of it, back in the days of wild Bill Donovan insiders referred to the new agency as the Central Investment Agency.
The CIA has had plenty of banks: Castle Bank, Nugan Hand, BCCI, the Carlyle Group, and every single private investment firm on Wall Street, Deutschebank, ABB, USB.
Like health care reform and helping the little guy, the war on drugs is just a PR campaign that no one really takes seriously.
Classic.My previous comments about the poppy fields in afghanistan being one of the reasons we are there apply to this story too.The degree drug money fuels the system is grossly underestimated by the UN.War on drugs?Yea....right.
gotta give senor costa mad props though for having the cajones to throw it out there in the memesphere. anyone have a wild guess who the banks are that he chooses not to name?
Right? This man needs to be interviewed in depth.
it's gonna be fun to see the FDIC's final ruling on the FASB 166/167 comment period which closed a few weeks ago. ought to be hilarious.
just keep 166/167 in mind as we approach 2010 Q1 earnings.
VITO PAULSON (gets up to pour LEWIS another drink)
I said that I would see you because, I heard that you're a serious man, to be treated with respect.
(then, after sitting)
But uh, I must say "no" to you -- and I'll give you my reasons. It's true, I have a lot of friends in politics, but they wouldn't be friendly very long if they knew my business was leverage instead of regulating, which they rule that as a -- harmless vice. But leverage is a dirty business.
Don Paulson...
VITO PAULSON
It -- makes -- it doesn't make any difference to me what a man does for a living, understand. But your business is ah -- a little dangerous.
I think it is funny how the underground economy is just forgotten about, over and over again.
Notice there have been NO arguments to raise revenues by legalizing drugs? Hmmm. Probably would take money out of the elite's pockets, so no, we can't have that!
Here in Canada it has atleast been suggested (like in Cali) that marijuana should be legalized. Of course the Hells Angels are big political contributors (not over the table, as far as I know, though) and are fighting to 'protect' their industry from legalization...
But people don't realize when looking at Vancouver housing prices that drug money plays A BIG PART. The drug money has gone nowhere, so even though the economy took a big hit, the largest contributor to Van house prices remained essentially untouched.
People that don't take that into account obviously don't know what they are talking about, when they say Vancouver house prices will collapse! Yeah, maybe, but only if marijuana is legalized, or the dealers find a better solution for what to do with $100k in cold hard cash!
and help reduce CO2 levels by growing plants
Authorities spend millions in aerial surveillance while foreclosed homes are converted to marijuana farms. It's a win/win for the economy.
At least the drug dealers are employed in an industry that adds value to the economy.
Citi has been laundering drug money for decades.
Need I remind everyone of the Citi 2001 Banamex acquisition?
Banamex known drug money laundering bank?
Citi putting Roberto Hernandez drug trafficker and drug money launderer on Citi's board?
Would Citi in 2001 be where "Fat Larry" Summers (think Fat Tony Solerno...) boss Robert "What Me Worry About Insider Trading at Citi" Rubin was working?
Okay Fat Larry. By virtue of your mentor, you can take credit for saving TBTF banks with drug cartel money cash flow.
I hear the CIA has opium investment and production booming in Afghan-i-nam for forecast record profits and cash flow...
Novice question: Should I be long CIA opium?
giant banks have huge liabilities hidden off-balance sheet in "structured investment vehicles"
where have i heard that phrase before ??? my memory is shot today.