Sunday, November 4, 2012

Max Keiser takes on Wall Street and financial reform

The Independent ran an article on Max Keiser in which he takes on Wall Street and what passes as financial reform.

Regular readers know I like to periodically provide a different perspective even when I do not agree with their conclusions.

During the course of the interview, Mr. Keiser addresses many of the issues discussed on this blog. 
A serf in the days of King John, Max Keiser argues, was in many ways better off than some US voters in 2012. 
"Because in the age of Robin Hood," Keiser says, "at least the process of theft was transparent. The barons came to your house. They whacked you over the head then they took all your money." 
Even if the poor didn't exactly empathise with their oppressors, Keiser adds, they could at least comprehend their methods. "And the serfs," he continues, "did enjoy a modicum of stability. They got something in return for their enslavement. A small plot of land. Shelter. A relationship with the lord of the manor." 
In the modern age of "financial tyranny" orchestrated by what Keiser refers to as "the banksters" in charge of the major financial institutions in the US and Europe, he believes, "We have reverted to a more pernicious kind of neo-feudalism. The instruments of larceny have changed; that's all."...
Theft happens behind the veil of opacity that covers wide areas of financial system.
You may never have heard the name Max Keiser, even though, once he begins to broadcast across China in the New Year, he will have confirmed his status as the most widely watched news commentator on the planet ... mercilessly castigates rogue financiers and the politicians notionally required to oversee them 
 "There is a fury against this global banking fraud that is building every day," he says. "People from all kinds of backgrounds, all over the world, have had enough."...
I'm broadcasting about global financial corruption; not so long ago, everyone used to say, who could be interested in that?"...
In case there was any doubt about where he is coming from.
Keiser recently derided the Eurozone as an entity "which poses as this prestigious club, but is actually a leper colony where everyone is checking who still has the most fingers left"...
He does capture the essence of the decline that is occurring across the Eurozone as the result of pursuing the Japanese Model for handling a bank solvency led financial crisis and protecting bank book capital levels and banker bonuses at all cost.

By placing the burden of the excess debt on the real economy, Eurozone policy makers have trigger a downward economic spiral.
Herbert and Keiser moved to London a year ago. "Because this is the world capital of banking fraud. Pretty much every financial scandal of the past 20 years has had its main component in London, because it has the least regulated banking environment. This is very important for the US, because America outsources its own fraud to London, just as it outsources its labour to China." The JP Morgan and UBS traders who lost billions, he points out, were both London-based. "And Lehman Brothers went through the UK. As did AIG." ...
Please re-read the highlighted text as London has been front and center in a significant percentage of the financial scandals over the past 20 years.

The question is why?

A number of experts have suggested that this is the result of financial regulatory laxity that was symbolized by light touch enforcement.

While that was a contributor, I suspect that London won the regulatory race to the bottom by its willingness to allow opacity into the financial system.  By winning the regulatory race to the bottom, London won the distinction of being home to more financial scandals.
Tony Blair, Keiser adds, "was the first prime minister in this country's history who knew that going into Downing Street would act more as a resumé builder than a way of serving the public. He has become fabulously wealthy with the contacts he made as prime minister." Blair, he continues, "personifies the move, in the UK and the US, away from representational democracy and towards control by bankers....
Mr. Keiser takes a direct shot at the Blob (aka politicians, financial regulators, Wall Street/the City and their lobbyists).

Regular readers may recall that Mr. Blair receives over $1 million per year as a part-time senior advisor to JP Morgan.  What exactly does Mr. Blair do to "earn" this money?  Like Robert Rubin for Citi, Mr. Blair is probably a 'political insurance policy'.
"You said you were disappointed by Obama. What should he have done?"
"When Franklin D Roosevelt came into office, he started putting bankers in jail. The foremost reason that America got out of the Depression was not World War Two, or because of the Keynesian stimulus. It was because of the legislation introduced to regulate markets [many such clauses in FDR's Emergency Banking Act of 1933 were dismantled under Clinton] and the banksters that Roosevelt sent to jail."...
I suspect that Mr. Keiser would support my call for restoring transparency to all of the opaque corners of the financial system.

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