Bankster Economics 101

The Sovereign Society
Wednesday, September 9, 2009

Bankster Economics 101

Politicians, Bankers Show their True Colors
When Challenged By Bloomberg…

“Give this job to Clemenza. I want reliable people, people who aren't going to be carried away. I mean, we're not murderers, in spite of what this undertaker thinks...”
- Vito Corleone

Dear A-Letter Reader,

For decades, “organized crime,” “la cosa nostra,” “the mafia” whatever you call it has been romanticized in media and pursued and prosecuted by law enforcement. And for what?

Their business model.

Think about it. That's all it really was…an extremely aggressive business model.

First they'd give you access to your most lascivious desires. Then, being the full service type business they were, they'd lend you the money to indulge yourself.

And in exchange for this service, they expected you to pay them back and shut the hell up.

At times their terms could be a bit draconian. If you didn't pay, or worse challenged their right to collect…well, let’s just say “things” could happen...

Things like fire, bombs, bullets, "significant harms that could befall not only private companies, but the economy as a whole..."

...significant harms...? Wait a minute! That's not from the gangster playbook!

Oh right. That was from an appeal by the Fed sent to Judge Loretta Preska of the U.S. District Court in Manhattan. The judge who ruled in favor of Bloomberg in their Freedom of Information Act suit. The one who ordered the Fed to release the names of the banks who got a piece of taxpayer money in the 50-something lending programs the Fed offered.

“It'd be a real shame if something "happened" to these nice green shoots you got sproutin' up...”

Let's be frank here. Since 1913, the Fed, and whatever “Don” has occupied the seat at the head of the table of our central bank (originally dubbed the “Federal Reserve” due to the stigma attached to the term “central bank”), has employed the mafia business plan.

They’ve done it for many years, and quite successfully. They'd offer you access to money to buy things you deeply desired but otherwise couldn't afford. And they expected you to pay them back and shut the hell up.

But as time went on, I guess success makes fools of us all.
Because it got to the point where times were so good and everyone was in so deep that the unthinkable happened. NOBODY could pay anybody back. (At least loan sharks on the corner would know when to tell you to “take a walk.”)

So in a way, Alan Greenspan and Ben Bernanke – with all their formal degrees and letters behind their names – ultimately weren't quite as smart as Carlo Gambino or Tony Accardo.

But a good business plan always has recourse for just such problems. A “backup plan” if you will. And so the treasury on behalf of the Fed, implemented yet another mafia business practice. In financial circles its called "raising capital." In less reputable ones it's called “collectin'”

In legal circles it's called “extortion.”

The way this process typically works is quite simple. It's sold as sort of an “insurance policy” against bad things happening to you or your place of business. You pay me, and nothin' happens to you.

Just like.... Hank Paulson asking for $700 billion from Congress just a year ago. “You gotta pony up dis taxpayer money Congressman, or bad tings is gonna happen to yer stock markets and such...” (FYI, I’m paraphrasing there. I don't have his exact testimony in front of me.)

And so they waved the threat of “systemic risk” at the American taxpayer, and the “protection” was paid.

Now, in “street level” of business, if you stayed current on your payments, generally the protection was pretty good. But if you fell behind, well isn't that how it always goes? You miss a payment, your policy lapses and something just awful happens to you?

But we taxpayers have been current and current and current.

So far, so good.

But then something happened that never happened in the mob business plan. Someone – namely Bloomberg – demanded to see the books. Now the Fed was stuck.

They couldn't implement the mob's solution to this eventuality. After all, making the questioner "disappear" wasn't legal. Nor was it practical, as it was an entire news service.

So they sent enforcers to the plate. A group called The Clearing House Association. A banking group who would confirm that indeed “...bad tings is gonna happen.”

Actually I have their exact language... "Survival can depend on the ephemeral nature of public confidence.... Experience in the banking industry has shown that when customers and market participants hear negative rumors about a bank, negative consequences inevitably flow." (Written like a true Harvard grad whose seen one too many Scorsese films.)

Interesting.

Now I don't have a theory about what the outcome of this might be. Never happened before. But in the long run, perhaps another end could result...

After years of public exposure and dogged pursuit by law enforcement, the presence and dominance of organized crime in the country today is decidedly on the decline.

We can only hope for a similar result for these central banksters....

Sincerely,

Chuck Dolce,
Guest Writer for The Sovereign Society

Editor’s Note: If you think the Fed’s mafia-style business plan is bad…then how about a Ponzi scheme that’s 1,000 times the size of Bernie Madoff’s shenanigans?