Is Paul Volcker the Father of "Too Big To Fail?"

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Tue, 01/26/2010 - 00:01 | 206097 Mr Lennon Hendrix
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Don Volker.

Mon, 01/25/2010 - 17:53 | 205702 brodix
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I've pointed it out here before, but Volcker didn't even cure inflation, since the recession he did cause reduced the demand for capital and you don't cure an oversupply by reducing demand. It only served to cover for the Treasury to borrow up excess capital and spend it back into the economy, while still paying interest on it. The irony of the super rich is the only way they can invest their wealth is to loan it back into the economy they drained it out of in the first place, then demand interest for the favor. The only difference between the credit bubbles of yore and today, is that they were primitive little firebombs compared to the financial hydrogen bomb we have today.

Mon, 01/25/2010 - 14:59 | 205544 Anonymous
Anonymous's picture

More bread and circuses.
Thank you Emperor Obombast!

Mon, 01/25/2010 - 14:09 | 205473 Anonymous
Anonymous's picture

One little peak at the Cabals, 'secret societies' and clubs that Volcker now belongs to or was at one time a member of tells us all we need to know about him and what his real goals are.

I beat a dead pony when I try and take Tall Paul down from his pedestal on other sites.

Thanks for at least exposing him here.

Mon, 01/25/2010 - 12:57 | 205349 Yardfarmer
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This latest exercise in political stage management is another act in the ongoing farce which has characterized this woeful administration from its inception. Rolling the old warhorse Volker out of the lumber room and slapping some new paint on this sorry weathered retread is a transparent and hopeless gambit, obviously a tacit admission that the wholesale looting of the country has run its course with the second phase of the deconstruction now on deck: Tsunami waves of residential and commercial default, insupportable and ruinous levels of taxation, unquenchable fires of inflation, state and municipal defaults crippling basic infrastructure and essential services along with requisite crushing austerity measures, in short a blighted and devastated landscape reflective of the economic war being presently waged on the American people by the likes of Volker, in other words a recapitulation of the Carter years on steroids. The $1.25 quadrillion black hole of derivative instruments guarantee there we have reached the point of no return despite Obama's cynical and disingenuous posturing.

Mon, 01/25/2010 - 13:41 | 205427 JR
JR's picture

Wow! Well said! IMO, this administration has one more sleight-of-hand card up its sleeve. Obama is set to announce new steps to help the "middle class" today in a partial preview of his State of the Union address--not to all of the middle class, of course, just segments of the middle class by transferring wealth from the tax-paying upper part of the middle class.  It's all a massive tax increase in the middle of a recession.  This is what the Democrats always do, use weasel words so everyone will think they’re talking about them, when they’re not.

In other words, the Obama administration is going to take the people in technology, the small business owners and those in professional fields across the board who are suffering from transfer of wealth socialism and put its other foot on their necks.


Obama to announce economic aid for struggling middle class families

WASHINGTON (AP) Jan. 25, 2010 -- President Barack Obama, determined to show he understands middle-class struggles, is offering new initiatives meant to help people pay bills and save for retirement. Obama was ready to announce the new steps Monday in a partial preview of his State of the Union address.

The proposals to be unveiled by Obama and Vice President Joe Biden at the White House include a doubling of the child care tax credit for families earning under $85,000; a $1.6 billion increase in federal funding for child care programs and a program to cap student loan payments at 10 percent of income above "a basic living allowance."

His initiatives also include expanding tax credits to match retirement savings and increasing aid for families taking care of elderly relatives (income ceiling?) That program would also require all employers to provide the option of a workplace-based retirement savings plan…

Obama will also call for caps on some student loans, limiting a borrower's payments to 10 percent of his or her income, and forgiving all remaining debt after 10 years of payment for those in public service work -- and 20 years for all others.

Mon, 01/25/2010 - 12:24 | 205295 Anonymous
Anonymous's picture

I cant see how a status can be invented.

Too big to fail is a status. Volcker might have theorized on it, discovered it but not invented.

Mon, 01/25/2010 - 11:55 | 205265 JR
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Mr. Whalen says, “I don’t think Paul Volcker is influenced by anybody.” We remember former Fed Chairman Paul Volcker differently. His banking cartel operation came right out of the Fed’s Bailout Manuel.

While defending his fleecing of the American taxpayer for his whopper bailout of Continental Illinois in 1984, Volcker told the Senate Banking Committee:  “The (bailout) operation is the most basic function of the Federal Reserve.  It was why it was founded.”

How true. The Fed’s mantle of “lender of last resort” means if loans go sour within the Fed fraternity, the money is extracted directly through the Treasury or eventually through the hidden tax called inflation. That’s why the Fed was created – to manufacture whatever amount of money might be necessary to cover the losses of the cartel.

And while Volcker was giving the nation’s insolvent seventh largest bank a free ride, he allowed the small banks to fold, including the tiny Bledsoe County Bank of Pikeville, Tennessee, and the Planters Trust and Savings Bank of Opelousas, Louisiana.  During the first half of that year, 43 smaller banks failed without an FDIC bailout. 

Other big bailouts also occurred in that era when go-go bank earnings were vastly increased by self dealing and by reducing safety margins, including taking on risky loans and speculating in the securities markets. When First Pennsylvania Bank required bailout in 1980, Fed Chair Volcker said he planned to continue funding indefinitely until we…work out a merger or a bailout… [Irvine H. Sprague, “Bailout: An Insider’s Account of Bank Failures and Rescues” 1986]

The usual suspect big bankers went through the usual charade of going to Washington, then as now, to work out advantageous bailouts for Continental and for First Penn, arguing, as did Volcker, that familiar Fed refrain that the TBTFs are  “critical to preservation of world economic stability.”

What is never said regarding Paul Volcker as Fed chair is that when he raised the interest rates above 20% in the early 1980s after the Carter era, he broke the Biblical law of usury in America and paved the way for the current usury whirlwind. Take a look at your loan-shark credit card rates in the land of the justice.

Ever since 1933 Eugene Meyer resigned from the Federal Reserve Board of Governors (and months later bought The Washington Post at a bankruptcy), no member of the international banking families has personally served on the Board of Governors.  They have chosen instead to work from behind the scenes through carefully selected presidents of the Federal Reserve Bank of New York and other employees.  We can assume the same for the treasury.

Just as Tim Geithner as president of the powerful Federal Reserve Bank of New York was on the path from the Fed to the U.S. Treasury there is no doubt that Paul Volcker as a past president of the Federal Reserve Bank of New York from 1975-79 was on his way to chairman of the Federal Reserve Board, first under Carter and then Reagan.  Volcker began his career at the NY Fed as an economist   He was succeeded as president of the New York Federal Reserve Bank by Anthony Solomon, a Harvard Ph.D. who had a similar background to Volcker’s.  Keeping to form, there are many similarities between Geithner’s rise to the treasury and Volcker’s to the Fed chairmanship.

The New York Times, on the appointment of Volcker as Carter’s chairman of the Federal Reserve Board, wrote on July 26, 1979, that Volcker learned “the business” from Robert Roosa, a partner in Brown Brothers Harriman, and that Volcker had been part of the Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at the treasury in the Kennedy  administration.  “David Rockefeller, the chairman of Chase (now JPMorgan Chase), and Mr. Roosa were strong influences in the Carter decision to name Mr. Volcker for the Reserve Board chairmanship.  Robert Roosa was Carter’s secretary of the Treasury, and represented not only Brown Brothers Harriman of the London Connection, but the Trilateral Commission, the Council on Foreign Relations, the Bilderbergers, and the Royal Economic Institute.  He also was a trustee of the Rockefeller Foundation and a director of Texaco and American Express companies.

On December 2, 1981, the Times mentioned that when Open Market Committee meetings were held, Solomon, as NY Fed president, and Volcker, as chairman of the Board of Governors, sat together at the head of the table and relayed instructions which they received from abroad (the city of London).

Mon, 01/25/2010 - 16:35 | 205628 Anonymous
Anonymous's picture

Thanks for this research.

It supports what I've writing for weeks about Volcker being a member of various elitist groups (including the Pilgrims Society) whose only interest is preserving or growing the wealth of the upper upper class, our hidden Royalty.

Mon, 01/25/2010 - 13:05 | 205364 Yardfarmer
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excellent and invaluable background! kudos to JR!

Mon, 01/25/2010 - 13:35 | 205407 WaterWings
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Ditto. Big +1.

Tyler, switch out the article for JR's post. Volcker's comment about basic Fed function was worthy of a death sentence if we turn back a few pages in our history books.

Mon, 01/25/2010 - 11:39 | 205249 mkkby
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I've been reading Chris Whalen's crap at various sites.  His opinion is like poisonous mushrooms that pop up unexpexctedly.  He is king of the unsubstantiated garbage.  Demand evidence of things you believe.  Oh, and by the way, he's writing a book... what a joke.

Mon, 01/25/2010 - 11:58 | 205268 pak
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I haven't been reading Chris Whalen), but I'd say, this post itself does not really address the issue raised in the header.

Mr. Whalen, you can't fool people with impressive headers and then feed them pedigree pal.

Mon, 01/25/2010 - 11:34 | 205242 ghostfaceinvestah
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Volcker was also the guy who insisted on the bailout of Continental Illinois, when the FDIC wanted to let it fail.

Mon, 01/25/2010 - 14:47 | 205527 Ripped Chunk
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History repeats itself over and over and over......  All the boys in the club.

We the people must intervene. Our leaders will not lift a finger to stop the looting.

This system had run its course.



Mon, 01/25/2010 - 11:16 | 205221 pak
pak's picture

A good Fed Chairman, a bad Fed Chairman.. Good to whom? Bad for what? To me the best Fed Chairman would be.. Larry Summers. This is the someone who won't spare the monetary firepower!

With a predictable outcome.)

Mon, 01/25/2010 - 11:08 | 205213 trav7777
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The system cannot be saved.

Simple as that.  Regulation WILL NOT SAVE IT.

You cannot REGULATE AWAY mathematics.

We have an exponential growth system which requires that credit continue to grow.  Taking us back to where PEOPLE are the sole originators of credit is going to collapse credit outstanding and deflatively destroy the entire money supply.

There is TOO MUCH DEBT out there and every last dollar of it REQUIRES interest service!  That means that there must at some point be MORE debt elsewhere that finds its way into the hands of the payors in order to pay the interest service.

A monetary-system-as-debt IS a forced exponential growth animal.  There's no way around this; I can demonstrate it in a minute as it is simple mathematics.

Credit growth took off on its own when they figured out how to originate without using PEOPLE, iow, CDOs, MBSs, CDSs, and all the other synthetic instruments.  Erecting "regulations" to stop this will collapse credit creation back to 40 years ago.  Doing this would cause the EXISTING debts' interest service costs to consume the entire money supply.

All of this because of ACCOUNTING ENTRIES!  We have let the fuckin bankers BECOME the barbarous relic strangling our society!

If you review the anti-gold standard commentary more than 100 years ago, you see the same inability to find specie to service monetary needs imposed by DEBT.

Mon, 01/25/2010 - 14:40 | 205516 Noah Vail
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BINGO! Nothing left to be said.

Mon, 01/25/2010 - 10:36 | 205204 Anonymous
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Volker worked for the same people that Ben works for. What makes anyone think there will ever be any meaningful changes? Volker is not the answer. The answer is long and involved and complicated. But for starters, as Ron Paul has stated, get rid of the FED.

Mon, 01/25/2010 - 18:52 | 205783 Anonymous
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"Get rid of the FED" sounds like a good idea today BUT my understanding is that one of the motivators for the FED was an onerous amount of corruption in Congress.

Details fuzzy; t has been a long time now since I visited that story of the building of the Union Pacific railroad makes todays graft look like (as one poster put it) chicken salad.

If the FED with its limited political affilitation gone, who will be setting fiscial policy?

Note our Supreme Court decision.

Just not too many easy answers.

Mon, 01/25/2010 - 10:32 | 205201 Jefferson
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Volcker and his G-30 cadre have a well defined global agenda which necessitates the engineered collapse of the US financial system.

While Volcker may primarily play a figurehead role at this juncture in his career, the nuts and bolts of derivatives are well understood by his policy wonk comrades at the G-30 who wrote the manual on derivative structures more than a decade ago.

The universal debt default we are currently experiencing globally is not accidental but rather a deliberate crash of the current international monetary system in order to make way for a new SDR, carbon cap and trade, and international financial transaction tax regime to be administered by the IMF/BIS/FSB cabal.

Any discussion of Volcker without a discussion of his stated advocacy of a single global currency controlled by a global central bank is hopelessly incomplete.

Mon, 01/25/2010 - 11:09 | 205214 trav7777
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Enough with the tinfoil conspiracy Potent Directors BS.  These guys aren't that smart

Mon, 01/25/2010 - 11:54 | 205263 Gordon_Gekko
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The only thing they are smart at is finding ways to loot and pillage the public, and the fiat money regime is their best idea ever.

Mon, 01/25/2010 - 14:41 | 205518 Ripped Chunk
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+ !!

Mon, 01/25/2010 - 11:47 | 205245 Jefferson
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Why don't you actually research the speeches and policy papers being published re: plans for a new international monetary order before you dismiss facts in the public domain as tinfoil? Otherwise you will continue to come across as incredibly naieve and foolish.




Mon, 01/25/2010 - 11:03 | 205209 P Rankmug
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Volcker was at Camp David as number two at the Treasury advocating Nixon to sever the gold link.  This ushered in the chaos industry which we have been dealing with for the last 39 years.  Think of Volcker as a father of world chaos.  Without a floating fiat currency linked to nothing except the feeble minds of CBs, none of the unnecessary roller coaster financial destruction we have experienced would occur---at least from the monetary side.  Of course, the captains of the chaos know when the swings occur and profit handsomely at your expense.  I agree, Volcker is now being brought in to finish what he started.

Mon, 01/25/2010 - 11:16 | 205222 bugs_
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Mon, 01/25/2010 - 10:26 | 205199 Anonymous
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You are right about that Gordon. He's a criminal. The Federal Reserve is a criminal organization. It's run for its masters. Abolish the fucking Fed.

Mon, 01/25/2010 - 09:47 | 205181 Gordon_Gekko
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Paul Volcker is a wolf in sheep's clothing.

Mon, 01/25/2010 - 22:34 | 206017 35Pete
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+(1)/(USD relative to 1913)

Mon, 01/25/2010 - 18:53 | 205785 Hephasteus
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Or a dragon in wolf's clothing with sheeps stapled to it. You gotta use plenty of layering to mind fuck people without getting frost bite.

Mon, 01/25/2010 - 14:40 | 205517 Ripped Chunk
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Volker - another Trilateralist/Bilderberger. If we want to mover forward into a new era, all these people need to be out of the picture in order for society to move forward in a new and productive way.  The old ways are finished. This fact has been clealy revealed to all.


Mon, 01/25/2010 - 14:35 | 205504 Noah Vail
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I agree, having read some of Volcker's recent speaches that I find very troubling. Its nice to have heros, but not invented ones. OTOH, with the Obamanation campaigning so hard to keep Banana Ben, there is ZERO HOPE of any improvement should he be tossed overboard. The recent pattern in government is that the successor is worse than the predicessor. This won't change.

Mon, 01/25/2010 - 09:45 | 205180 Anonymous
Anonymous's picture

"“bending” for the old big banks under Glass Stegal and dealing with the monsters we have today are the difference between chicken shit and chicken salad." Ditto

Is one to assume the author likes eating chicken shit as much as salad - what does this phrase actually mean apart from being facetious?

ZH is curiously quiet, after months of railing against Timmy et al and bemoaning Volcker being sidelined, on approbation of the new proposals. You may not like the administartion but can't we give them a pat on the back for finally getting around to making some serious moves on the TBTF? You can't always just be down on them, stick AND carrot is the way forward, otherwise they have nothing to lose apart from the Squid's approbation (given most competitors have been wiped out and the carry trade can't go on forever but has been real sweet, I bet GS is crying over having to give up BHC status).

Also, curiously little coverage of the Supreme Court decision that institutionalises the corporate as a person with the speech rights accruing to a person. Basically, State government can now be bought which ultimately means that Federal govt is even more in thrall to special interests. Ultimately, this could be the undoing of the Union. If sweetheart deals such as the Nebraska exemption from Medicare increases become necessary to keep any sort of Federal legislation on course, what is the point? What's in it for Texas to pay Nebraska's share?

Mon, 01/25/2010 - 15:17 | 205564 Anonymous
Anonymous's picture

Too Big NOT to fail.

Monetization and ZIRP mask what would otherwise be a failure in the debt auctions of the USA...with all that entails.

Presenting the "Triple Curve"--about to become an undeniable event in the final days of the Global Financial Crisis. Nearly 40 years to the day of moving from gold-backed currency to pure fiat.

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