Wall Street WARZONE
Jail Goldman’s CEO? Too Late. America Needs The “Wall Street Revolution!” Why? Soon 4 Ticking Time-Bombs Will Reach Critical Mass, Bankrupt America!
by Paul B Farrell, JD, PhD
| Discuss | Print | 3/2/2011

Put Goldman Sachs CEO Lloyd Blankfein in jail for six months, and all this will stop, all over Wall Street and America, a former congressional aide tells Matt Taibbi in his latest Rolling Stone attack, “Why Isn’t Wall Street in Jail? Financial crooks brought down the world’s economy — but the feds are doing are doing more to protect them than to prosecute them.”

Taibbi’s right, everyone knows Wall Street’s run by a bunch of dictators who are doing more damage to democracy and capitalism than North Africa’s dictators. But jail the CEOs of Goldman, Citi, BofA or my old firm Morgan Stanley? Too late! Only a revolution will stop Wall Street’s self-destructive capitalism. Watching the people revolt against dictators like Mubarak and Gadhafi reminds us of the spirit that sparked the American Revolution in 1776.

But today we need a 1930s-style revolution. And look back at the S&L crisis two decades ago whan America had a backbone, indicted 3,800 executives and bankers. Today’s leaders have no backbone. Besides jail time won’t reform the darkness consuming Wall Street’s soul. We’re all asleep, in denial about the core moral crisis facing America, destroying us from within. Yes, we need a new revolution.

Jail time? We’ve heard that so many times before. Journalists have been beating that dead horse for three years. Jailing CEOs made sense in early 2009. But our naïve president missed that opportunity, instead surrounded himself with Wall Street insiders as Bush did with Blankfein’s predecessor. Trojan Horses manipulating a Congress filled with clueless Dems mismanaging tired Keynesian theories.

Taibbi got it right: Washington’s error was in protecting Wall Street’s billion-dollar crooks when they should have been prosecuting CEOs for criminal behavior in getting us into the 2008 mess. So today, the political statute-of-limitations has run. The “jail” solution is wishful thinking, like praying to the tooth fairy for a miracle. Time for action. Time for a revolution on Wall Street. Wake up America, listen:

Our country is bankrupt. It’s not bankrupt in 30 years or five years,” warns economist Larry Kotlikoff, “it’s bankrupt today.”
Economist Peter Morici: “Capitalism is broken, America’s government is two bankrupt political parties bankrupting the country.”
David Stockman, Reagan’s budget director: “If there were such a thing as Chapter 11 for politicians” the “tax cuts would amount to a bankruptcy filing.”
BusinessWeek recently asked analyst Mary Meeker to run the numbers. How bad is it? America really is bankrupt, with a “net worth of a negative $44 trillion.” Yes, we’re bankrupt.

And it will get worse. Why? Because nothing can stop America’s self-destructive Wall Street bankers. They simply do not care that their “doomsday capitalism” is destroying Wall Street from within, and bankrupting America too.

Read the full column in MarketWatch detailing the 4 “ticking timebombs” that will trigger the “third meltdown” of the 21st century and bankrupt Wall Street.

Buffett Resign? Yes, Credibility Shot Defending Rating Agencies. Massive Conflicts in “Too-Greedy-Too-Fail” Stock in Moodys & “Goldman Conspiracy!”
by Paul B Farrell, JD, PhD
| Discuss | Print | 6/16/2010

Yes, he should resign, probably won’t. But something’s definitely wrong with his defense of the credit rating agencies, especially since his 20% ownership in Moody’s is a clear conflict of interest that taints his credibility. Reuter’s Felix Salmon says Buffett’s testimony before the Federal Crisis Inquiry Commission was a “PR Disaster.” Buffett claimed he made “a mistake like virtually everyone in the country made.” Wrong, ol’ Uncle Warren is not like “everyone else.” Worse, he should have been in there with all the other leading critics who between 2000 and 2007 were warning of a subprime credit meltdown coming. See my June 2008 summary of those warnings: “20 reasons new megabubble pops in 2011: Greed blinded us to subprime meltdown, it’ll blind us next time too.”

That’s why ol’ Uncle Warren’s defense of the credit rating agencies is so unAmerican, lacking true leadership character. Here’s the diagnosis I made of his problems when he was defending Moodys, Goldman and the rest of the corrupt Wall Street banks earlier in my MarketWatch column: ”Buffett defends Goldman, joins Greed Conspiracy: Uncle Warren strums ukulele, in denial of Wall Street’s toxic business model.” A few key points: Ol’ Uncle Warren has a bad case of denial. Remember, not too long ago Buffett was calling derivatives “weapons of financial mass destruction.” And yet, there he was on stage at his Berkshire shareholders annual love-fest defending Wall Street’s most toxic companies, trapped in denial, defending the greedy culture that got America into its current mess:

  • Praising Moody’s “business mode,” and by inference all rating agencies that rubberstamped Wall Street’s toxic debt, setting up the last meltdown …
  • Defending Goldman Sachs bad behavior despite the fraud suit and a possible criminal indictment (while hiding his own conflicts-of-interest as a big investor in both Moody’s and Goldman) …
  • Praising Goldman’s CEO Blankfein, Wall Street’s greediest fat-cat banker who paid himself $68 million of his stockholders profits last year …
  • Defending Goldman with a bizarre argument that Goldman is no more guilty than the other Wall Street banks, a tacit approval of the bad behavior of all Wall Street banks in the Goldman Conspiracy …
  • Worse, ol’ Uncle Warren also tried deflecting attention from Wall Street’s corrupt business model by blaming government regulators for the meltdown, another example of Uncle Warren’s blind denial, ignoring the fact that in the past year Wall Street spent over $400 million on lobbyists and campaign cash to make absolutely certain regulators, Congress and the Obama team all played along with Buffett’s songs that guarantee Wall Street controls Washington regulators.
  • Ironically, all this comes from a man who once lectured Congress on “Moral Integrity: I want employees to ask themselves whether they are willing to have any contemplated act appear on the front page of their local paper the next day, read by their spouses, children, and friends … Lose money for my firm and I will be understanding; lose a shred of reputation for the firm, and I will be ruthless.”

Yes, Buffett’s in denial … just like his banker buddies … like his friends in Obama’s White House … so short Buffett, short Baby Berkshire, short Goldman, short Moody’s. Why? Because they’re all “shorting America” piling on debt that’s pushed our debt-to-GDP ratio to 92%, past the IMF’s 90% danger zone. (more) Sorry Uncle Warren, but your credibility is shot, maybe you should resign.

Corporate CEOs vs Warren Buffett’s “Economics 101″
by Paul B Farrell, JD, PhD
| Discuss | Print | 4/27/2010

In the post-Enron-WorldCom era, greed again turned rampant, repeating again after the credit meltdown: Executive salaries are again skyrocketing; the gap between executive and worker compensation is widening; outsourcing increases unemployment; and executives still focus narrowly on short-term quarterly earnings (to help maximize their personal net worth in merger deals and stock options), rather than enhancing long-term company values that benefit investors.

In spite of the disclosure requirements in the Sarbanes-Oxley law, executives are back to the pre-scandals business-as-usual games of manipulating earnings, analysts, accountants, regulatory agencies and the press. Worse, today’s CEOs and their executive compensation committees continue flaunting their excesses as the gap between the rich and the rest of America widens. Worse, in the wake of the subprime credit meltdown, as banks suffered huge losses and pocketed billions in taxpayer dollars, billions was passed as yearend bonuses, while incompetent executives at Citi, Bank of America, JPMorganChase and other “too-stupid-to-fail” banks were fired with billions in severance. (More)