These are opposing forces that have a magnetic attraction for each other.
There can be no “TRUST” without enforceable “RULES”
I think the statements above are easily understood and can stand on their own very well without disagreement.
First the Big Old Moot News Story On The Banks
History is repeating itself 100 years later, only the names have changed and one key player switched positions.
Before you click the coming link, please know that Morgan Stanly has in our history, been the Saviour of Wall Street more than a few times but was the key big player in banking investments in the Oil Futures Market that helped drive up the cost of energy worldwide, creating a recession and later its own demise of banking failure because of the futures it held in the oil market as the price collapsed. They would not be the only bank involved that actually handled or hoarded “some” of the oil as a commodity not just as a paper promise to be leveraged. It is a liability that should have been weighed on the fractional reserve bank system rules if they still exist.
Please read this wikipedia.com history of “The Bankers Panic Of 1907”
I do not find it amusing that the rules created from that mess were taken off the books in 2003 by our Congress( promoted by lobbyist for the banking industry)
and resulted in the same mess all over again in a very short time. The only thing still standing from the remedies of 1908 is the Federal Reserve.
Now to relate this to what is still happening but with the assistance of your taxpayer dollars.
A method of Hoarding Oil in tankers offshore to make a profit between the difference in spot price and future price of oil known as “CONTANGO”.
Please Read Wikipedia.com definition of “Contango”
Now you can quickly see that if one tanker that can hold 50 million barrels can sit and wait at hardly any cost till a profit can be made around 3 dollars per barrel that the net profit would be $150,000,000 per tanker. Morgan Stanly actually has storage facilities to store more than several tankers on shore plus what ever the tie-up in tankers sitting off shore.
And there is now a shortage of tankers as they all sit off shore holding oil waiting for prices to go up or the contango spread to increase.
Now this still is not to mention how this causes a mis-report of the actual inventory reports that the government and industry use to gage “supply and demand” that has an immediate effect on oil spot and future prices. So the contango spread can be induced by the banks.
Yes the banks are still at it ! And Morgan Stanly owns half of Heidmar Inc., a company that operates oil tankers on behalf of groups of owners, hopes to make money in the bet that the stimulus package will cause an upswing in the consumption and price of oil 2q or 3q of 2009 from States portion of the spending.
Well if they are wrong they will most likely just bid-up future oil contracts as they have for the last 4-5 years. If thats not enough or they do not have enough money to push the oil futures up, the taxpayers will have to come to the rescue again or the bank will crumble with the falling price of oil. Just a repeat event.
As if they have not learned from the same mistakes felt just last year. Well its now your money at risk so why shouldn’t they?
Gee it’s not funny anymore that we the taxpayers don’t get a chance to make anything on the upside, only the downside.
What the hell is up with that? They should be charged with market manipulation with taxpayer dollars. If everything else is legal, that one should “stick”.
It is strictly a Lie when Citigroup’s CEO sat on national TV and told us that they were returning to banking products only. They would not play non-banking product investments again. But here they are doing it again.
I finally found a web post that explains this better than myself but they are calling the current spot/future spread a “SUPER CONTANGO”
More on Money and Lies
The object for Lies is for someone to get at or keep your Money. Lets state some samples just in the case “you don’t get it”.
Our Bank is Solvent but we can’t lend any money.(more profit to be made in non-bank products like futures of oil contracts)
We do not use our investors or depositors money in a hidden way to play markets. (we finance those who do and we may own all or part of them)
The bail-out money was not used to buy other banking companies or pay bonuses to executives.(we had enough money for that but it would break us to pay it)
Congress told us to make loans to those with a lower credit score(but in the process we stopped using the Freddie & Fannie lending standard and make loans to folks that had no provable income and package it with a low variable interest rate that was only initially affordable and sold them to other investment firms and hedge funds).
Naturally, the banks do not say it in a way that is a lie, just a incomplete truth. So are they lying or misleading you for more of your money?
But you can find these lies everyday even when you shop or see advertisements. Here are some samples.
We froze the cost of energy to help you (you did not know the price was going down, so we are holding the price up to make more profits)
100% whole wheat bread (does not mean it is whole grain, if it was whole grain it would say that)
Cranberry Juice – 100% real juice (only has to contain 1% to be cranberry juice so what else is in there…100% juice of some kind)
Pancake Syrup is not Maple Syrup but Corn Syrup. If it had even 1% maple syrup, it could and would be called that.
Of course the above are not lies, just mis-leading information. The same stuff that the cooperate world says to congress and the public when they write this stuff.
Congress does not even have a clue how the economic system works. They have to rely on other folks that at least say they understand it. The experts whose name you may never hear could be just misleading them and us for the money.
Because there are still some rules on the books to prevent much of the lies we don’t see, advertising has to be misleading for which there are hardly any rules that apply here.
The Moot Point here is that when they tell you we have too many rules and red tape that need to be relaxed or we need to re-write the rules. Yes it would be a lie that they are doing it in your interest but they don’t say it that way so its only mis-leading. They (the folks that lobby for it) want easier access to your money and they want to get at it even easier. They know better than you what to do with it to create jobs or whatever it is that you want to hear today.
Creating rules and regulations is no small task. It is not cheap for the government to do nor cheap for Businesses to follow. So in short, they would not have been created but for a need that existed. I site three main reasons that sometimes are inter-related.
1- To stop consumers from being cheated or discriminated against.
2- To protect the company(s) that lobbied for them.
3- To protect the nation against foreign interest.
Personally, I find that the second one has been the most troubling. It has been the result of what you now see by removing the rules from the Banks and Wall Street.
To make matters worse, by not providing enough funding for enforcement over the years, the government has been inept to do anything with the rules that remain on the books. Unless you are blind, you can clearly see this in the risk of our food supplies that have been getting worse not better.
Can you see this getting better anytime soon as the next several years attention and resources will be spent just stabilizing the economy.
I mean to say they are not putting out the fire now but making the fire a manageable disaster. If it all works we will begin the work of clean-up… thats paying the money back…. you don’t really think we will have the ability to pay this back do you? Most likely we will have trouble servicing the interest on the money.
So once again, we will have to fight and spend money and time to replace rules that have been either removed or amended to allow them to be side-stepped by perhaps only a choice few that lobbied for them. These play out the most after laws are passed and and the final wording is made in a sub-committee. This is how many loop-holes are created by use of vague or carefully crafted language. So it will not be enough for you to get laws back on the books but you will have to follow it through until the final wording is made.
The stimulus package does not contain final wording but is only a framework of how much to spend and on what general items. By the time it is worded, it will surely contain much of the pork that was not in there when it started out. So not a lie at the time, just mis-leading. I sure money will be spent for items nobody was asking for. Each Congressman has a beneficiary in their district they want to splash with your money to keep the funds coming for re-election. That would be an unspoken truth. This time the final word will play-out in the states where some, in the absence of a SHOVEL READY PROJECT, are being created with certain benefit as you read this.
I think for the fastest action, the states should pick-up the short term slack. Where the State Governments are unable to act because of corporate influence, the people are going to have to create their own ballot issues to make changes. Ohio was one of many states that capped the interest rate a credit card company could charge at 21%. I am not sure there is a cap now as I have seen some folks statements with as much as 36% not being in arrears… yet. And 18-26% for folks that have credit scores in the mid 700’s is a norm. This is a positive area we can re-regulate for the consumer.
California is notorious for enacting legislation alone but the one big problem for California acting alone is that Corporate America will easily play one state against the other so the one that stands out will lose as it did with energy issues. It must be a concerted effort by many states. That is the democracy we think we still have or is made Moot by Wall Street also.
There is a very traceable money connection of the banking committees in Congress and the banks we are bailing so I tell you this…
You will not get an appropriate change if you do not raise your voice in protest. Let them know you are aware.
Write your Congressman, Write your local papers letter to editor, write your favorite blog, hold a protest sign at your county seat, state house or Washington, DC
If you do not place pressure on the elected officials, you just will have no idea where this will go until it is too late!
This is not to say I have no faith in getting the banking system working again, just who is able to walk away with most of the money in the end is the real issue.
We can be very sure that the Banks have had plenty of time to cook the books before the fed’s come to see them so we really may not have a good provable picture as to what they have been up to.
I won’t win a Nobel Prize in economics for my non-secret formula like the folks had for predicting the market (that was so flawed) but here it is…
Money + Greed = Lies
(Rules – Lies) + (Enforcement – Lies) = Trust
Money – Trust = Moot Money