The battle for power

What do think this crisis is about? What was it about when it started and is it about that now?

I would argue that certainly it began as a simple financial crisis. But as the scale and intractability of the crisis revealed itself it became something much more profound. It became what it is now – a battle for power.

The power to dictate who does what, when and for whose benefit. Such as who bails out whom, at whose expense. But it is also about a purer kind of power – the power to shape how events are seen and understood. ‘ War of agreesion’ or ‘Liberation’? Rape or ‘she was asking for it’? Police brutality or Necessary Force? How we understand what happens, is what decides how we react – which in turn, decides who has power over us.

One way of seeing this crisis, is as saving from utter ruin, the most powerful and successful financial system the world has even seen, the system which made the West absolute masters of the Globe and the system whose future health or failure will determine the future of the West.

This is the version of the crisis the bankers, the wider financial class and the politicians who pimp for them, want you to beleive in.

Then there is another view of the crisis. A view which says this financial crisis is about seeing if banks now have the power to bend nations to their will. It is a contest between democracy and debt. One relies on courage. The other fear. Which one will define our generation, we and our children, will soon find out.

So how is the battle to shape how we see this crisis actually fought. Let’s look at three examples which, I think, show how.

In an article, in the NY Tmes last week, was a story about how AIG still has over a hundred Billion dollars in CDS contracts with European banks. These are almost identical to the CDS contracts which bankrupted AIG the first time. These new contracts were sold by AIG to European banks. AIG agreed to insure bank ‘assets’ against default. If the assets fail, AIG has to pay the banks the full face value of the assets.

Here is the sentence where how you see the event, is shaped – “A.I.G. said its counterparties were holding the loans and mortgages in blind pools, making it hard to know how they are faring the European storm.”

An amazing sentence im my opinion. For how it attempts re-shape and control your reality.

The counterparites (the European banks), “were holding…in blind pools… making it hard to know” . In this ‘AIG version’ of reality, – unquestioningly passed on by the jouranilist, and thererfore given an aura of objective, reported truth, – the ‘counterparites’ are doing something, – active tense – creating a situation over which poor AIG has no control. The situation simply ‘makes it hard’ for AIG to know – passive construction.

It is important to AIG that you see AIG’s situation as created by the banks, with AIG the passive victim of circumstance beyond their control.

The truth, however is quite different.

Then key is to ask – what exactly are the mysterious “Dark Pools” mentioned?

Here is a standard definition – . “An investment vehicle that raises capital from the public without telling investors how their funds will be utilized.” Here is how Investopedia, which is run by Forbes, describes them – “Blind pools are often a product of late-stage market rallies, when investors and financiers tend to become more greedy than prudent.”

What is crystal clear from both these comments is that AIG would have know FROM THE OUTSET they were insuring a ‘Blind Pool’. The Banks did not hide the assets after the fact, ina blind pool, to cheat poor, innnocent AIG.

Banks bought debt from other, already vastly indebted, banks and nations, put them into blind pools and asked AIG straight out, would you like to insure thse here BLINF POOLS? . AIG, in the fullsweaty greed of the bubble market said, ‘Oh yes please -we’d love you to pay us insurance premiums to insure your Blind Pools. We don’t care, and won’t ask, what’s in them. . And in return you can tell the world – anyone who cares, which at that time was NO ONE – that these assets are now 100% gold standard, AAA rated, safe as houses, insured against all loss and default. Lovely doing business with you, now give us our cash!’

But that truth has been twisted away and you were fed the other, the AIG, version. Just like the Banks are telling you it was horrid lying nations who sold them bonds that are now so worthless the banks, poor victims, need more bailing out.

The question is who is doing this twisting of the truth? Here is another quote from the week that points us in the direction of who. This one surfaced over at Tickerforum. It was in a letter sent by a Senator, in response to a citizen’s complaint about the Senator having supported Bernanke’s nomination.

“I was advised that rejecting [Bernanke’s] nomination would cause markets to nose dive, which would hurt retirees and families saving for their future. I am not enthusiastic in my support. ” – Senator Barbara Mikulski. So the good senator took advice and did what she felt was best for us all. That’s OK then.

Question – WHO ADVISED? She “was advised”. That tell-tale Passive construction again. WHO?

I doubt she will ever ‘recall’ exactly who, where, when and what exactly was said. So we are left to guess. We are at liberty to guess because we know ‘someone’ advised her. Someone who thought Bernanke and his bail-out was the right, the best, the only thing to do.

Here are a few facts to keep in mind while you wonder who it could possibly have been. They come from a report written by Kevin Connor, co-director of the Public Accountability Initiative and published by an NGO called Institute for Amercia’s Future. The report is called Big Bank Takeover”. I give you the details so you can decide for yourself.

Since the bail out of Bear Stearns the 6 biggest US banks and their various lobbying organizations (A full list is in the report) have so far spent 600 million dollars lobbying Congress, Regulators and The White House. The Financial industry has, since Bear Stearns, hired 243 former government insiders to lobby their former employers. Many of these lobbyists used to be Chiefs of Staff of powerful Senators. Senator Dodds, for example – who is Chair of the Senate Banking Committee, and whose ‘reform’ bill was so recently evisecerated and then its empty corpse paraded before us – has FIVE of his former staff now lobbying for the banks.

Now you tell me – who do you think might have ‘advised’ the oh-so-diligent and morally uncompromised Senator Mikulski?

And what comes, in the end, from all this twisting of the truth and advising?

Last quote is a sloppy one – you’ll just have to indulge me – I read it last week on MarketWatch, FT or some such, but can’t find it now. But I rmember it clearly. Some City expert was quoted as saying of the Dodd bill – that it was, “No game changer.”

A candid remark. A “Game” in which nothing has changed for the Banks. He’s candidly correct.

It is a game, their game and you’re being played!