Free Gaza boat rammed by Israeli Navy - Cynthia McKinney was one of the passengers

I'm so proud of Cynthia McKinney right now! Once again she has proven the courage that she has, and her desire to fight for Justice anywhere in the World. Right now I'm so happy that I voted for her for President instead of Obama. Here she is telling it like it is.



Meanwhile, CNN carried pictures of Obama playing golf in Hawaii. Shades of Bush playing golf while our young men and women were dying in Iraq and Afghanistan. Bush eventually pledged to stop playing golf as long as the Iraq War continued. Obama apparently never got the memo.



Here is an eyewitness account from a CNN reporter describing the incident.



Contrast this with the Israeli version of events contained in this AlJazeera report.



Who do you believe? The objective eyewitness from CNN, or the Israeli government official who was no firsthand knowledge of what happened? This is just another example of the blatant lies of the Israeli government and why you should never trust anything they say. Yes, I'm generalizing but in this case I believe its warranted.

Here's what Cynthia McKinney who was on board the Dignity has to say.

Cynthia McKinney, former U.S. congresswoman and Green Party presidential candidate, was traveling to Gaza aboard the Dignity in order to assess the impact of Israel's military onslaught against the civilian population of the Gaza Strip. According to McKinney, "Israeli patrol boats...tracked us for about 30 minutes...and then all of a sudden they rammed us approximately three times, twice in the front and once in the side...the Israelis indicated that [they felt] we were involved in terrorist activities."

This is from a press release from the Free Gaza website.
http://www.freegaza.org
Here is a link to their webpage where they post the latest news.
http://www.freegaza.org/index.php?language=EN&module=latest_news

I also highly recommend this article from the "Black Agenda Report". Rather than inserting a short quote, I am taking the unusual action of posting the full article because I feel that every word in this article is relevant.

McKinney to Obama: "Say Something" About Gaza Humanitarian Crisis

Former Georgia Congresswoman Cynthia McKinney has called upon President-Elect Barack Obama to "please, say something about the humanitarian crisis that is being experienced by the Palestinian people, by the people of Gaza." McKinney spoke to CNN news from the Lebanese city of Tyre, where she had debarked from the relief vessel Dignity after it was rammed on the high seas by an Israeli patrol boat, early Tuesday morning. Passengers also report the Israelis fired machine guns into the water near their ship.

McKinney was among the passengers on an attempted voyage from the island of Cyprus to Gaza, where Israeli bombs and missiles have killed hundreds of Palestinians, including many civilians, since Saturday. The Dignity carried three tons of medical supplies and a number of doctors prepared to treat the more than 1,000 Gazans wounded in the Israeli attacks. The 66-foot craft had made two previous humanitarian relief trips to Gaza since the summer. Israel has blocked food, medicines and other essentials from entering Gaza in a campaign of collective punishment against the 1.5 million Palestinians that live there under a Hamas Party administration.

President-Elect Obama has been silent on the Israeli attacks, while President George Bush has supported Israel's actions.

"I would like to ask my former colleagues in the United States Congress to stop sending weapons of mass destruction around the world," said McKinney, who was the Green Party's presidential candidate in November. "As we are about to celebrate Dr. Martin Luther King Jr's birthday, let us remember what he said. He said that the United States is the greatest purveyor of violence on the planet. And guess what: we experienced a little bit of that violence, because the weapons that are being used by Israel are weapons that were supplied by the United States government."

A CNN reporter who accompanied the passengers and crew of the Dignity confirmed that the boat "was sailing with full lights" when "one of the Israeli patrol boats, with no lights on, rammed the Dignity, hard."

Israel blames the collision on the relief vessel.

Said McKinney: "Our boat was rammed three times, twice in the front, once on the side.... What the Israelis are saying is outright disinformation."

McKinney compared the Israeli action against the Dignity to the attack on a U.S. naval vessel during the 1967 Arab-Israeli War. "I recall that there was another boat that was attacked by Israelis, and it was the U.S.S Liberty." Thirty-four crewmen died and 170 were wounded by fire from Israeli planes and torpedo boats. The Israelis claim it was a case of mistaken identity. "People would like to forget about the U.S.S. Liberty," said McKinney, "but I haven't forgotten about it and the people who were on that ship have not forgotten what happened to them."

Now there is a statement from someone that deserves to be President of the United States.

Gaza - Stop the Killings!

Once again Israel is killing innocent civilians in Gaza in a genocidal campaign. This time there seems to be a world wide reaction in opposition to Israel's bloody policy. The internet has changed the dynamic. Israel can no longer hide behind the MSM in the US. A recent study showed that the internet is now more popular than newspapers as a source of news.

Of course the people in the US that still use TV as their main source of news will get the skewed MSM version of events that will no doubt place full blame on Hamas for Israel's actions. But internationally I don't think that Israel can count on its usual support from the media. AlJazeera has a major role to play in this. I have been very impressed by the English version of AlJazeera. It is painted as a propaganda tool by the US media, but I have found it to be very objective. If anything, at times I have been disappointed that it hasn't taken a more pro-Palestinian view.

The strength of AlJazeera is in providing images that are not shown in the US MSM. While US TV is quick to show the victims of the latest suicide bomber in Israel, it will never show the Palestinian victims of Israeli military. Here is the latest report on Gaza from AlJazeera.



It's truly amazing that AlJazeera is able to transmit these images given the Israeli siege of Gaza. I can only guess that the video was uplinked by satellite from within Gaza. Imagine being a reporter for AlJazeera inside Gaza while Israel is conducting bombing campaigns. We know that military forces in Israel have targeted journalists in the past, so these unsung heroes deserve our highest praise and thanks for the job they are doing revealing the truth to the world.

Videos like this bring home the reality of the situation in Gaza. Without these images, Israel's propaganda spinmasters can portray their brutal campaign in any way they like. But after witnessing the magnitude and force of the bombs dropped on Gaza, it becomes irrefutably clear that Israel has committed a War Crime. The Palestinians are absolutely defenseless against the F-16s used by Israel to attack them. At the same time they are confined by the Israeli siege and have no place to go for safety. How can anyone justify this heinous act of violence?

The Tom and Baracky Show

The latest installment of the Tom and Baracky Show appeared today on Meet The Press. Taken at face value, this was an interview. But in reality this was nothing more than an infomercial starring Tom Brokaw and Barack Obama. Personally, I think the old Tom and Jerry was much more fun. But this is the Great Depression of 2008 – fun is a rare commodity these days.

The last time we saw an episode of Tom and Baracky was at the Presidential Debate in October. But did you know there was a previous installment of the Tom and Baracky show? It occurred on May 3, 2007 at MOMA – that's the Museum of Modern Art in New York. This was a private dinner for Goldman Sachs traders only.

The dinner was not a fund-raiser for Obama, then in the early stages of his Democratic primary campaign launched February, 2007. Brokaw interviewed Obama for about 45 minutes on mostly international issues. Brokaw received an honorarium, donated to charity. The Obama campaign called the event a "moderated conversation" when I inquired on Monday.

So Tom and Barack are quite comfortable with this type of reality show. They've had plenty of practice conducting sham interviews. Whether or not Obama will admit it, it was clear that there were no surprise questions in today's Meet The Press “interview”.

T&B have great chemistry together and the results prove that they are a great sales team.

Bundled together, by Sept. 28, 2008, the latest figures available, Goldman Sachs members or their families contributed $739,521 to Obama, making the firm [the] number one source of donors to the Obama campaign, according to the Center for Responsive Politics.

And you thought that Henry Paulson exit would be the end of Goldman Sachs running the nation's economic policy. No such luck. In fact there is another Obama-GS connection that is pointed out in this article. One of Obama's biggest fund-raisers was James Johnson, a Goldman Sachs board member and former chairman and CEO of Fannie Mae.

Johnson was originally tapped by Obama to lead his vice presidential vetting squad until he quit because of his own controversies.

Here's more about James Johnson from Wikipedia.

An Office of Federal Housing Enterprise Oversight (OFHEO) report from September 2004 found that, during Johnson's tenure as CEO, Fannie Mae had improperly deferred $200 million in expenses. This enabled top executives, including Johnson and his successor, Franklin Raines, to receive substantial bonuses in 1998. A 2006 OFHEO report found that Fannie Mae had substantially under-reported Johnson's compensation. Originally reported as $6-7 million, Johnson actually received approximately $21 million.

Yeah, I guess that would be considered controversial given that Fannie Mae is at the center of the current financial crisis. Expect Johnson to keep a low profile. But behind the scenes, he has the clout to affect key Obama decisions on the economy. I wonder to what extent he lobbied Obama with regards to his economic team?

Obama's Goldman Sachs Economic Team

As has been widely reported the Obama Economic Team of Summers and Geithner is the beginning of another chapter of Goldman Sachs dominated economic policy.

The president-elect's choices for his top economic advisers — Timothy Geithner as Treasury secretary, Lawrence Summers as senior White House economics adviser and Peter Orszag as budget director — are past protégés of Rubin, who held two of those jobs under President Bill Clinton.

And former Treasury Secretary Robert Rubin is of course a former co-CEO and co-Chairman of Goldman Sachs. Rubin has also been involved in some recent controversy himself with regards to his role in the Citibank debacle.

After leaving the Treasury, Rubin, 70, became a senior adviser to the top executives at Citigroup, which on Nov. 23 became the latest financial institution to get a government bailout.

Geithner is currently the President of the New York Fed. As I detailed in a previous article, the Chairman of the New York Fed is another GS executive – Stephen Friedman. (In fact, Friedman was the co-Chairman along with Robert Rubin from 1990 to 1992.) This gives Friedman considerable influence in choosing a Geithner's replacement as President of the New York Fed. And Friedman still sits on the Board of Goldman Sachs which makes for a very cozy relationship – don't you think?

What can I say? It's a small world, financially speaking. And that financial world is dominated by former executives of Goldman Sachs.

Related Posts

• Goldman Sachs über alles
• Uncle Barack's White House
• The International Banker's China Syndrome
• Goldman Sachs: Wall St. Gangstas

If we make it through December

"If we make it through December"
by Merle Haggard, October 1973

If we make it through December
Everything's gonna be alright I know
It's the coldest time of winter
And I shiver when I see the falling snow

If we make it through December
Got plans to be in a warmer town come summertime
Maybe even California
If we make it through December we'll be fine

Got laid off down at the factory
And their timing's not the greatest in the world
Heaven knows I've been working hard
Wanted Christmas to be right for daddy's girl

I don't mean to hate December
It's meant to be the happy time of year
And my little girl don't understand
Why daddy can't afford no Christmas here

If we make it through December...

Merry Christmas everybody!

Israeli missiles target US Aircraft Carriers

This is not as misleading as it may at first sound. I will in fact prove that this is true. But first you must understand that the country that is aiming these missiles at US Aircraft Carriers is China. But the missiles are in fact Israeli designed cruise missiles. And in fact the Israelis got their designs from the US, so these are actually US designed cruise missiles that are being aimed at US Aircraft Carriers. Got that? Your tax dollars are being used to enable China to target US Aircraft Carriers. Now that you understand the big picture, let's break it down and provide the proof that this is true.

So let's start from the end of the story and work our way backwards. I came across this article recently while doing one of my routine Google News searches on China - "China Missile Deployment Targets U.S. Aircraft Carriers". Here's a few quotes.

China’s People’s Liberation Army (PLA) is deploying anti-ship YJ-62A missiles along its southeast coast, with a range that can cover the entire area of Taiwan.
[...]
Shih [editor of Taiwan’s Defense International magazine] also points out that if the United States supports Taiwan with aircraft carriers if there is an outbreak of military tension in the Taiwan Strait, the YJ-62A missiles—also known as “aircraft carrier killers”—will become an important weapon in the PLA’s strategy.

Sun Kauo-hwa, national security consultant of the Taiwan National Policy Foundation, also believes that mainland China is mainly targeting U.S. aircraft carriers, rather than Taiwan. “There are quadrangular relations between the United States, China, Taiwan and Japan in the Pacific,” Sun said, “the biggest target for mainland China’s naval deployment in the Pacific is the U.S. Pacific Fleet, especially their aircraft carrier battle group.”

So now we have established that China has deployed missiles along its coast that are capable of hitting any ship that happens to cross through the Taiwan Strait, and that the most likely target is the U.S. Pacific Fleet. And even more specifically the nuclear US Aircraft Carrier George Washington which is now permanently stationed in Yokosuka, Japan.

But you say, well the source of these reports are Taiwanese who have an interest in raising alarms about Chinese threats to Taiwan. What proof do they have that these missiles are targeting ships rather than targets in Taiwan itself? Well maybe this article will help - "YJ-62 Anti-Ship Cruise Missile".

The YJ-62 ASCM outperforms most Western and Russian anti-ship missiles in terms of range and warhead mass, thought it is not clear whether the missile possesses the same accuracy and anti-jamming capabilities. Nevertheless, it demonstrates China’s capability to design and develop a world-class advanced anti-ship missile.

What do you know, this is not just any ordinary missile. This is a cruise missile and it is described as a "anti-ship" cruise missile. It is also described as carrying a significantly large warhead. The kind you might need to take out a large vessel like an Aircraft Carrier. And finally I note that this sophisticated piece of military hardware was designed by China rather than having been purchased from Russia for example.

So where is the Israeli connection? Well that's coming next. Here's a rather old article from 2003 - "China's Missile Imports and Assistance From Israel".

In addition to the alleged Patriot technology transfer, Israel has allegedly supplied China with cruise missile technology, including sensitive US technology. Specifically, Israel is allegedly assisting China with the development of its YF-12A, YJ-62, and YJ-92 cruise missiles.
[...]
On 2 January 2003, State Department spokesman Richard Boucher stated that Israeli military exports to China were of concern to the United States. The following day, Israel announced that it would comply with U.S. demands and halt all contracts on the export of arms and security equipment to China. [...] According to the Associate Press, China issued a written statement in response to the Israeli announcement. In the statement, it states that, "It is China's consistent position that the development of normal military trade cooperation with Israel is a matter between the two countries."

By now you probably recognized the YJ-62 cruise missile as being the one that the Taiwanese are saying that China is using to target US Aircraft carriers. So actually this is an Israeli design, and the Israelis got their design from the US. There's also Patriot Missile technology that was transferred. No wonder that in the case of the latest anti-missile technology that is being installed on Israeli soil, the US military won't let any Israeli even touch it. But don't let that make you come to the conclusion that the US has learned its lesson with regards to our "special friend" in the Middle East. The US continues to do "joint development" with Israel. And Israel continues to engage in military trade with China. In fact in 2005 Israel was China's second largest arms supplier - second only to Russia. And in case it wasn't obvious from the quote in the article above, the Chinese attitude is that this is none of Uncle Sam's business - even if it does involve the illegal transfer of US technology to China.

And in addition to using Israel to steal US military secrets China has been stealing directly from the US as in the case of Shu Quan-Sheng, the physicist and corporate executive from Virginia arrested in September for selling American space technology to Beijing. He is now facing 25 years in prison.

Lucky for us that China doesn't have any aircraft carriers of its own to challenge the US Navy, right? Well it may not be long before that situation changes. According to this article China will have its first aircraft carrier in just 2 years - "Chinese aircraft carrier?".

In March last year, a Beijing-backed Hong Kong newspaper reported that China could have its first aircraft carrier by 2010. The Pentagon said this year that China was actively engaged in aircraft carrier research and would be able to start building one by the end of this decade.
[...]
An effective Chinese carrier could have serious implications for any conflict involving Taiwan by strengthening the mainland's ability to counter the island's air force and control its sea lanes.
[...]
Taiwanese separatism is the 'biggest threat' China currently faces, said Maj-Gen Qian [director of the Foreign Affairs Office at the Chinese Ministry of National Defence], who insisted on US dropping military support for the island.

So what's the US response to the Chinese building one or more aircraft carriers? The answer is found at the end of the article I quoted above.

Admiral Timothy Keating, head of the US Pacific Command, said in Beijing last year that China's development of a carrier should not be the cause of any unnecessary tension, and that the US would even be willing to lend a helping hand.

Why not? We already supplied them with cruise missiles to sink our carriers, why not help China to build carriers of their own? This will help with the plan to split the Pacific fifty-fifty between China and the US. With the current US budget deficit we just can't afford to patrol the whole Pacific on our own - it's a BIG ocean. Why not get China to help out? This at least is the plan proposed by the Chinese military to the US military according to this article - "US aircraft carrier keeps tabs on China".

In spring this year, a congressional hearing in the US revealed that the Chinese military had approached high-ranking US military officers with the idea of “dividing the Pacific into two spheres of influence” between Beijing and Washington, with China taking charge of the seas off Hawaii and westward.

Hey I have a better idea. We split the world into three regions called Oceania, Eurasia, and Eastasia. Wait. Didn't George Orwell write a book about that called Nineteen Eighty-Four?

Related Posts

• The International Banker's China Syndrome
• Bailout will turn China into economic superpower
• Bailout will be followed by Sellout
  
• Is the U.S. a colony of Israel?
• Is Israel the 51st state?
  

Uncle Barack's White House

Ralph Nader famously asked just after the elections whether Obama would be an Uncle Sam for the American People or an Uncle Tom for the Big Corporations? I would add to that list of famous uncles another one - Uncle Joe as in Joseph Stalin. Good old Ralph got me in trouble big time with his comment, as my Digg reply was to say that really Nader could have gone even further and asked whether Obama was going to be a House Negro or a Field Negro. I used the alternative spelling of Negro which ends in "-er" which got me temporarily banned from Digg.

I was going to write a nasty "Digg sucks" post on my blog but decided against it. While Digg may at times be sucky, I wouldn't say that Digg sucks as a whole. I do have major issues with the whole bury mechanism and at times it seems like the average Digg user is an uneducated adolescent, but overall Digg does have its good points. But if I could find a good alternative to Digg, I would certainly be open to exploring it. I looked at Reddit, but I just could not get into their user interface. Oh well.

Now I know that Al-Qaeda recently came out and referred to Obama as a "House Negro", but for the record - my comment came out first. Although it wasn't up on Digg for long before it was removed. My point was that the Civil Rights movement consisted of more than just the "I have a Dream" speech by Martin Luther King. It also included the famous "House Negro vs Field Negro" speech by Malcolm X.



Malcolm X had a dream too. If you look at the status of Black people today vs. the 1960's, there has been a great deal of progress for the relatively few fortunates like Barack Obama. But the majority of African-Americans are not much better off then they were when MLK gave his famous speech on the steps of the Lincoln Memorial. What will Obama do to try to change this? Does he even have a plan? Or is he more concerned with the plight of Middle Class White America? And as Nader has mentioned numerous times Obama never even referred to Poor People in his campaign. And BTW, why does he constantly refer to Martin Luther King as The Preacher? Is he afraid to say his name in public?

Anyway, back to the Obama White House. Now, I recognize like everyone else the historic nature of the fact that he is the first African-American President of the United States. And I realize what this symbolizes to people of African descent all over the world. But minorities in the US should also realize that Obama did next to nothing during his campaign to speak out for their issues. If anything, he was slightly to the right of center on any issue touching minorities in the US.

And internationally the same thing is true. He has never made any campaign promise to come to the aid of the Palestinians for example. Yet some people still have expectations that once he takes his oath and takes up residence on Pennsylvania Avenue, that somehow this will change.

Anyone that still believes that Obama represents change is consciously (or unconsciously) ignoring the facts. Just look at the appointments he has made so far and the rumored appointments to come, and it should be obvious that Nader got it right. Obama represents the Big Corporations, not the Average Citizen.

The other thing you have to give Ralph credit for is pointing out that there really aren't two political parties in America. There is just one. Sure we have elections and periodically the party in control switches. But nothing really changes. And the two parties conspire to make sure that no 3rd party is able to share in their power.

This is really not much different from China where there is one party rule. Every once in a while the Communist Party gets together and they change the President and reshuffle the other top positions and again, nothing changes.

Now I don't believe that Obama started out as a bad guy. He has good roots as a community organizer, and early on in the primaries he seemed to represent a real alternative. To me the pivotal moment was the AIPAC convention speech. That's when I think that Obama was given a choice and he decided to make his deal with the devil. He sold his soul to become the next POTUS.

And why do I say that since this is a very strong charge? The proof to me is that after the AIPAC convention, the Jeremiah Wright attacks stopped. And that was the key issue that could have kept him from becoming President. All you have to do is go to Google Trends and type in "Jeremiah Wright" and you'll notice that the articles mentioning him just faded away after the AIPAC convention. And who knows what other dirt the bad guys had on Barack that they were ready to expose.

Against Dukakis it was Willie Horton and against Kerry it was the Swift Boat attack. Of course McCain and Palin came after him with William Ayers, but this was never a real issue and was not nearly as potent an attack as the Jeremiah Wright attack would have been. In fact McCain's advisers wanted to use Wright in the campaign but McCain declared it off limits. What I am suggesting is that McCain was taking his orders from AIPAC. That was part of the deal.

Now that Obama is the President-in-waiting, there is this tendency to personify his administration. The press keeps saying that Obama is going to do this or that after he takes office. But this is a dangerous over simplification. Obama may be the next President and he may represent the office of the President as a whole, but he can't do anything on his own. We're really talking about an Obama administration. And I'm not convinced that Obama will be the person with the most influence in terms of setting the policy.

Still Obama will be the figurehead representing the policies to the public, and this will be a very useful image for those who are truly responsible for those policies. Obama is a sympathetic figure and the public is more likely to accept unpopular decisions from him than they would from someone like Joe Biden, for example.

Which brings us back to the 3 Uncles - Sam, Tom and Joe. It is the image of Uncle Joe that most concerns me. The iconic "man of the people" who is supposed to be representing the average citizen, when really he is representing the powerful Elite. There is a danger of creating a cult of personality around Obama. It truly disturbs me that people will keep waiting for Uncle Barack to fix things at the same time that things are falling apart. And of course the thing that is falling apart the fastest is the economy, like a giant Humpty Dumpty.

The US Economy sat on a wall;
The US Economy had a great fall.
All Obama's cabinet,
And all Obama's Fed,
Couldn't bring the Economy back from the dead!

And in fact I don't believe that Humpty just fell, I believe he was pushed. And the same guilty parties responsible for this homicide are the ones that are now appointing themselves to positions of power in the "new" Obama Administration.

Buy Gold NOW!

Disclaimer

I have absolutely no formal training in economics. You can take my advice or leave it, and I don't care either way. If you take my advice and get screwed that's your problem. If you don't take my advice and end up wishing you did, don't blame me. Either way your on your own in this jungle we euphemistically call the "free market".

My advice... for what it's worth

I don't get into giving out investment advice much. Mostly I think the stock markets are rigged and are a rich man's game. The rest of us mostly get screwed. So I keep my money in a money market account. But once in a while I observe a trend that is so glaringly obvious that it seems crazy not to take advantage of it.

So call me crazy but... I think this is a huge opportunity right now to buy gold at a relatively low price and make some money. The last time I gave financial advice like this was September 20 after the stock market had rallied. I suggested that this was due to government intervention and that eventually the market would prevail. At that time the S&P 500 was at 1255. Today it's at 876. That's a 30% decline. So call me crazy but...

The price of Gold

Right now the price of gold is $733 per ounce. Here are some charts.

You can see that gold peaked at around $1000 per ounce in March. And you can see that it's been declining ever since. What I find interesting is that the price is repeatedly driven down and then comes back up. And this is the part where I wildly speculate about what is going on, so call me crazy or clairvoyant... or just use your own brain and see if any of what I'm about to say makes sense.

What I think is going on is that the price of gold wants to go up, but that the Central Banks around the world are conspiring to keep it artificially low. Did I say conspire? I meant to say "taking coordinated action". What's the difference?

Your probably as surprised as I was when I first looked at the gold charts that the price of gold is not rising as we head into this financial crisis. The only explanation is that there is more supply of gold than demand, and the most likely source of that supply is the World's Central Banks.

Who owns the World's Gold?

Just go to the Wikipedia page for "Official Gold Reserves" and you'll immediately see that the Central Banks have huge hoards of gold. By the way, keep in mind that these are the "official" numbers and presumably not the real numbers. China's Central Bank for example says it has 600 tonnes of gold. The problem is I found a quote from 5 or 10 years ago and guess what? China reported 600 tonnes of gold. My guess is that by this time China has double that amount but the "official" figure has not changed. And then of course there is the "official" US figure of 8,133 tonnes which hasn't changed in years. But of course there has been no audit of the gold in Fort Knox for many years and some people actually think that it may be empty of gold.

And there is another surprise in this table. The IMF is the 3rd largest holder of gold in the world according to this chart at 3,217 tonnes. Where did that gold come from? Did the US Federal Reserve and other Central Banks contribute this gold, or has the IMF been stealing this gold from nations in financial distress in exchange for lending them the money to bail them out?

But regardless, the point is that the Central Banks have huge sums of gold, and if they want to keep the price of gold from going up they simply need to sell some part of it into the market to artificially lower prices. The World's Central Banks are the OPEC of gold. They are a cartel which seeks to manipulate the price of gold.

What happens if Gold prices take off ? PANIC!!!

So why would they want to keep the price of gold down? Very simple. To avoid a panic. If the price of gold is seen to be going up dramatically in a short period of time, then that would tend to make people lose confidence in the World's Fiat Currencies. And then people would rush out and buy more gold and there would be an all out panic. After all the value of a fiat currency is largely based on confidence.

The evidence of a Gold Price manipulation

Now for my "proof". While I can't prove what I have said above I can point you to some information which is what got me thinking about this in the first place. And here it is.

Exhibit A - The Central Bank Gold Agreement (CBGA)

This is a 5 year agreement between Central Banks to limit the sale of gold to 400 tonnes per year. It was signed on September 26, 1999. This agreement expired in 2004. CBGA 2 was signed on March 8, 2004 and limited annual gold sales to 500 tonnes. What this proves is that the Central Banks are essentially a Gold Cartel and they do "conspire" to control the gold market.

You will notice that the US is ostentatiously missing from the list of signees. Even though the US does not appear on the list of signees, it has informally agreed to abide by the deal.

So why did the Central Banks require a Gold Agreement? Ostensibly it is to stabilize the gold market. Before 1999 the price of gold was depressed and had fallen below $300 per ounce. This was not to the advantage of the holders of gold. The Central Banks represent about 20% of the "gold above ground". Just like OPEC, the Central Bank Gold Cartel attempts to manipulate prices. So much for a "free market".

My guess is that China was emerging as a key buyer of large amounts of gold. And the Cartel was trying to ensure that large sums of gold did not end up in the Chinese Central Bank, and that what gold did end up there would have to be bought at a higher price. (Just like OPEC controls the oil market.) Here's an interesting analysis.

Conclusion

In the current financial crisis, it is natural that there would be an increased demand for gold which would tend to push up prices. The Central Banks have an interest in stabilizing gold and therefore are probably engaged in a conspiracy (I mean a "coordinated effort") to keep prices from going up to quickly. Probably the policy is to keep the price of gold from rising much faster than inflation. But in order to keep the price stable, the Central Banks will need to sell increasingly large amounts of gold as long as the world's currencies are seen as vulnerable.

Eventually it seems to me that the Banks will want to hold on to their gold reserves and will not be able or willing to continue selling at an artificially low price. In other words the price of gold will rise. That price will be capped by the Central Banks. It seems clear that the gold price will not be allowed to rise over $1000 per ounce, if only because of the psychological effect that this produces. That effect is one of financial panic, which must be avoided at all cost during this financial "crisis". Once the immediate crisis is over, then the price of gold can be allowed to go above $1000. But right now when stock markets are crashing is not seen as a good time.

There are 3 things to take away from this discussion.

1. The price of Gold is controlled by the Central Bank Gold Cartel.
2. Gold is currently at an artificially low price and will probably go up in the short term.
3. In the long term Gold will go probably up faster than inflation.
   

So by all means... buy gold low now.

Is it legal to own gold in the US?

Yes. From 1933 to 1974 it was not, but currently it is. In 1933 under Roosevelt during the Great Depression, the US government confiscated all gold in private hands and made it illegal for Americans to own gold. But in 1974 after the US got off the Gold Standard, it was made legal for US citizens to own gold. There is a caveat that the gold cannot be used as money, whatever that means exactly. Anyway, the result is that you are free to buy as much gold as you like and store it in a safe in your house or a safe deposit box at a bank, or do whatever you like with it.

How to buy gold

There are some funds that track gold like IAU and GLD. This is probably the way I would buy gold if I was smart enough to take my own advice. You can also buy physical gold, but from what I saw you will pay a considerable differential in the buying price vs. the selling price. A quick search of the internet will come up with various options. As always, watch out for scams.

I remained silent

FIRST THEY CAME attributed to Pastor Martin Niemöller (1892–1984)

When the Nazis came for the communists,
I remained silent;
I was not a communist.

When they locked up the social democrats,
I remained silent;
I was not a social democrat.

When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.

When they came for the Jews,
I remained silent;
I was not a Jew.

When they came for me,
there was no one left to speak out.

An early supporter of Hitler, by 1934 Niemöller had come to oppose the Nazis, and it was largely his high connections to influential and wealthy businessmen that saved him until 1937, after which he was imprisoned, eventually at Sachsenhausen and Dachau concentration camps.

Here is my updated 2008 version of this poem.

When they imprisoned the "black crack smokers",
I said nothing,
I was not a "black crack smoker".

When they locked up the "hispanic illegal immigrants",
I remained silent;
I was not a "hispanic illegal immigrant".

When they came for the "arab terrorists",
I did not speak out;
I was not a "arab terrorist".

When they locked up the "anarchist protestors",
I remained silent;
I was not a "anarchist protestor".

When they came for me,
there was no one left to speak out.

An early supporter of the War on Terror, by 2008 [your name here] had come to oppose the Neocons. Eventually Martial Law was declared. He was arrested for violating curfew when he was driving home late from work one day. His whereabouts remain unknown.

The International Banker's China Syndrome

I will get straight to the point. My belief is that this financial "crisis" that we are in was deliberately planned. This is part of a plan to transfer economic power from the United States to China. The people behind the plan are the International Bankers. They have been setting up this scenario for at least 20 years if not longer. One of the main conspirators is Alan Greenspan who knowingly created this bubble. The transfer of power to China will occur by giving it more power in the IMF. China will also be included in an expanded G-7. The current "crisis" will be used as the excuse or the cover for this transfer. The International Bankers who are behind this plan have already profited enormously from this scheme. They are willing to sacrifice the economies of the World in order to carry their plan through to the end. The motivation is to weaken the global power of the US which is seen as too independent for their purposes. China is the prototype of the neo-Fascist government which they seek to impose upon the world.

Co-conspirators

Alan Greenspan - former Federal Reserve Chairman
Ben Shalom Bernanke - Federal Reserve Chairman
Henry "Hank" Paulson - US Secretary of Treasury
Stanley Fischer - Governor of the Bank of Israel
Milton Friedman - economist (deceased)
Robert B. Zoellick - Head of World Bank
Sen. Phil Gramm (R-TX)
George Soros
George W. Bush
Ronald Reagan
Richard Nixon
Henry Kissinger
China
Walmart
Goldman Sachs
JP Morgan
Citibank
Bank of America
Rothschild family
Rockefeller family
CFR - Council of Foreign Relations
Skull and Bones
Aspen Strategy Group
G30 - Group of Thirty

Neo-Fascism

While I can't offer any definitive proof that there is a conspiracy by the International Bankers to shift economic power from the US to China, I can offer some anecdotal evidence. As for motive, I believe that the Chinese neo-Fascist model that it has adopted since 1978 is considerably more profitable for the International Bankers than US style capitalism. This essentially is a new form of slavery. One of the problems with a system like slavery is that it is impossible for others to compete against it. So in a free trade world without barriers, the one who adopts slavery first is the winner. In this case China with its almost unlimited supply of cheap labor and its autocratic style of government is the clear winner.

The conclusion is that "free" trade is actually slavery in disguise and we should all be opposed to it. The solution is to protect local industries through trade barriers. As you would expect, Milton Friedman has been the champion of "free trade". It is part of his philosophy of laissez-faire economics that was heartily adopted by Ronald Reagan. The opposite of "free trade" according to this school of thought is "protectionism", and of course that must be avoided at all cost. Friedman pretends to be on the side of the consumer, but actually he is just on the side of the International Bankers who are the ones who benefit the most from "free" trade. Naomi Klein does the best job of refuting the Miltonian economics.

Privatization

And it isn't just free trade. It's all of these.

• deregulation
• free trade
• privatization
• cuts to government spending

The next stage which we have already entered is "privatization". After the bailout the US will be left with an even greater national debt. The "solution" which will be offered is privatization. This is nothing less than selling off the US piece by piece to the highest bidder. It has already begun. Highways are being "privatized". Chicago's Midway Airport is being "privatized".

Goldman Sachs has been at the forefront of the drive to privatize American assets. Basically this amounts to mortgaging America. Selling it off in pieces for a quick sum of money and then renting it back. If it sounds like America is going into hock, it is. We will end up renting back America like modern day sharecroppers instead of owning America. And the country sitting on the biggest pile of dollars out there is China. So China will end up owning a large chunk of America. But this is the plan. This is the inevitable outcome of the huge trade surplus and the enormous debt that the International Bankers have been encouraging the US to accumulate all these years.

Another way of looking at this is that America will become a colony of the International Bankers. And we will be forced to pay tribute in the form of taxes and inflation and usage fees for the highways and airports that we used to own. The thing that makes this such a diabolical scheme is that the average American will never realize that he or she has become a slave and especially won't realize who his or her master really is. We will blame the government, but the government will be powerless to make any changes or to defend us.

The military option?

The one asset that the US still retains that provides it a global advantage is the US Military. But of what use is the military against a faceless enemy like the International Bankers? It is even more futile than the War against Terrorism. In the past we had a policy to restrict the transfer of technology to other countries, especially our enemies. But today high tech companies are busy opening up research labs in China and India. And our military does joint development with Israel and other countries. So the military and technological advantage of the US is slowly eroding.

Timeline

1964 - China detonates its first nuclear weapon.
July 1971 - Kissinger goes on a secret mission to China.
October 25, 1971 - Mainland Communist China replaces Republic of China (Taiwan) on the UN Security Council. Taiwan loses all representation in UN.
February 1972 - Nixon engages in direct talks with Chairman Mao Zedong. Nixon issues the Shanghai Communiqué which states that there is only one China and that Taiwan is part of China.
1978 - Economic reforms called "Socialism with Chinese characteristics" were started by pragmatists within the Communist Party led by Deng Xiaoping. The goal of Chinese economic reform was to generate sufficient surplus value to finance the modernization of the economy.
January 1, 1979 - The United States transferred diplomatic recognition from Taipei to Beijing.
January 1981 - Ronald Reagan becomes President of the United States.
1985 - Beginning of S&L crisis as Ohio and Maryland declare "Bank Holidays" to stop runs on the banks.
August 1987 - Alan Greenspan appointed Federal Reserve Chairman by Ronald Reagan.
October 19, 1987 - Stock Market crashes on Black Monday. Biggest single day loss in history - 22%.
June 1989 - Tiananmen Square protests in China brutally suppressed.
September 16, 1992 - George Soros "breaks the Bank of England" earning an estimated US$ 1.1 billion and forcing it to devalue the pound.
July 1997 - Asian financial crisis.
November 12, 1999 - Bill introduced by Phil Gramm that repealed the Glass-Steagall Act was signed into law by Bill Clinton.
March 2000 - Dot com bubble bursts.
December 15, 2000 - Phil Gramm introduces Commodity Futures Modernization Act (CFMA), which prohibited any governmental regulation of credit default swaps (CDS), on the last day before Christmas Holiday. It was never debated in Congress.
January 2001 - George W. Bush becomes President of the United States.
July 13, 2001 - 2008 Summer Olympics awarded to Beijing.
September 11, 2001 - World Trade Center attack.
October 7, 2001 - US invades Afghanistan.
December 11, 2001 - China accepted into WTO. Robert Zoellick was the US negotiator.
2003 - Warren Buffett warns that derivatives are "financial weapons of mass destruction".
March 2003 - US invades Iraq.
June 4, 2003 - "Hank" Paulson, the chief executive of Goldman Sachs, completes joint venture that gives the firm greater access than any other foreign investment bank to China's increasingly lucrative financial services market.
2005 - Lenovo of China completes the acquisition of IBM’s Personal Computing Division, making the company the world's third largest computer manufacturer.
2005 - Bank of America acquired a 9% stake in China Construction Bank for $3 billion. CCB is the 2nd largest bank in China.
2005 - China National Offshore Oil Corporation, known as CNOOC, one of the huge state-owned oil companies, made a $18.5 billion bid for Unocal which was rejected by the US Congress.
2005 - Zhou Xiaochuan, Governor of China's Central Bank, joined the influential Washington based financial advisory body, the Group of Thirty.
February 1, 2006 - Ben Bernanke succeeds Greenspan as Chairman of the Federal Reserve.
April 2006 - China's President Hu Jintao visited the United States.
May 30, 2006 - "Hank" Paulson nominated by Bush to be Treasury Secretary.
August 2006 - Aspen Strategy Group holds "China’s March on the 21st Century" conference.
December 2006 - First Semi-Annual Strategic Economic Dialogue. Attendees include US Treasury Secretary Henry Paulson and six other cabinet members plus the Chairman of the Federal Reserve, Ben Bernanke.
July 1, 2007 - Robert Zoellick becomes president of the World Bank.
December 11, 2007 - Grand Opening of the NYSE office in Beijing.
March 2008 - Wang Qishan elected Vice-Premier.
June 2008 - Latest meeting of U.S.-China Strategic Economic Dialogue. Senior representatives from US and China are "Hank" Paulson and Wang Qishan.
August 2008 - Beijing Olympics - China's "coming out party".
September 2008 - Current Wall Street panic begins in earnest.
October 3, 2008 - Passage of Wall St. Bailout Bill

"Hank" Paulson and Vice Premier Wang Qishan - Partners in Crime

In the most recent meeting of the U.S.-China Strategic Economic Dialogue in April 2008, the senior representatives from US and China were "Hank" Paulson and Wang Qishan. Wang and Paulson are no strangers. In fact you could say they're partners. In 2003 when Paulson was CEO of Goldman Sachs, he struck a deal with Wang. At the time Wang was the Mayor of Beijing. Paulson was trying to gain access to the Chinese financial services market for Goldman Sachs.

As a condition of the deal the Chinese demanded that Goldman make a $67 million "donation" to cover investor losses at a failed Chinese brokerage firm. The firm in question was a state-owned enterprise, Hainan Securities, whose officials had been accused in lawsuits of embezzling millions of dollars from investor accounts. This money was to be used to pay out depositors whose money had been embezzled. Goldman also agreed to lend $100 million to a 52-year-old Chinese banker named Fang Feng Lei, and his partners.
Wang had been Hainan's party secretary from 2002 to 2003. Hainan is China's smallest province. Hainan is also the largest Special Economic Zone laid out by Chinese leader Deng Xiaoping in the late 1980s.

China gives the Special Economic Zones special economic policies and flexible governmental measures. This allows SEZs to utilize an economic management system that is especially conducive to doing business that does not exist in the rest of mainland China. Hainan is an island and the special economic policy that the government gave it seems to be in regards to real estate development. It seems that China was looking to attract tourists to beach resorts there.

Here's a choice quote from a NY Times article.

Mr. Fang had met often with the founders of Hainan Securities in the early to mid-90's. He set up a real estate subsidiary in Hainan for China Construction Bank at the request of Mr. Wang, then the bank's head, in 1992. That company, Intime Holdings, invested more than $1 million in a beachfront real estate project with Hainan Securities, according to company documents. That real estate project now includes a hotel that Mr. Fang's brother operates. The property on which the hotel sits was later acquired by a conglomerate that Mr. Fang and Mr. Zhou, the central banker, helped prepare for a public offering when they were with C.I.C.C.

It seems there was plenty of money to be made in Hainan real estate. And it would not be surprising to find out that Chinese officials were getting a cut. But they got too greedy and ended up owing $67 million to their investors. It sure was nice of Hank Paulson to pay off those investors. And I'm sure the people at Hainan Securities that were being sued were relieved as well. Did I mention that Hainan Securities was a state-owned enterprise?

Here's some more choice quotes.

Goldman officials were reluctant to invest in any brokerage firm with a checkered past. But by June 2003, Mr. Fang and Mr. Wang stepped into the negotiations and helped Goldman massage the deal, the people involved in the talks said.
[...]
But there is no evidence that Mr. Fang or Mr. Wang was involved in fraud at Hainan Securities, or that Goldman's donation money will benefit them in any way.

Of course not. Why would anyone think that? Just because they were the ones negotiating the deal? Nonsense. And I'm sure Mr. Fang didn't benefit from the $100 million personal "loan" from Goldman Sachs either. Of course not. He probably wanted to donate it to his favorite orphanage or something like that.

By this time you've probably noticed that Mr. Wang has worn many hats in his career. And you're also wondering who Mr. Fang is. Well here's what he was doing in 2005.

A few weeks ago, Charles Li and Fang Fenglei, two Chinese-born bankers, were at the center of things when the China National Offshore Oil Corporation, known as Cnooc, one of the huge state-owned oil companies, made a $18.5 billion bid for Unocal. That deal alone could earn lawyers and investment bankers up to $300 million in fees.

Another player in this deal was the then Goldman CEO "Hank" Paulson. Who was said to be pushing this deal "behind-the-scenes". Ultimately the deal fell through when the US Congress rejected it because it would give China control over a strategic US oil company.

And here is the ultimate endorsement of Mr. Fang.

Fang is now perhaps the most connected investment banker in China. A former People's Liberation Army soldier, Fang is close to the central bank chief, Zhou Xiaochuan, and is prized for his inside knowledge of Communist Party workings.

He is the only Chinese-born top banker without a Western degree, or English fluency. But that did not prevent Goldman Sachs from hiring him last year to run its joint venture investment banking operation in Beijing, and extending a $100 million loan to him.

The G30 invites China's Central Banker

Zhou Xiaochuan is currently the Governor of the People's Bank of China and is the man in charge of China's monetary policy. In 2005 Zhou Xiaochuan was invited to join the G30 or Group of Thirty. This is not like the G7 which is an organization of the top economic government officials from US, Japan, Germany, France, Britain, Italy and Canada. No, the G30 is a private group. It was founded in 1978 by the Rockefeller Foundation

Here are the current members according to Wikipedia. Notice that there are actually 28 members and not 30.

Paul Volcker - Chairman of the Board of Trustees; former Chairman of the Federal Reserve
Jacob A. Frenkel - Chairman; Vice Chairman, American International Group
Geoffrey L. Bell - Executive Secretary; President Geoffrey Bell and Company
Leszek Balcerowicz - Former President, National Bank of Poland
Jaime Caruana - Counselor and Director, MCM Department, International Monetary Fund
Roger W. Ferguson, Jr. - Chief Executive, TIAA-CREF
Stanley Fischer - Governor, Bank of Israel
Mervyn Allister King - Governor of the Bank of England
Guillermo Ortiz Martinez - Governor, Banco de México
Jean-Claude Trichet - President, European Central Bank
Tommaso Padoa-Schioppa - Minister of Economy and Finance, Italy
Zhou Xiaochuan - Governor, People's Bank of China
Yutaka Yamaguchi - Former Deputy Governor, Bank of Japan
E. Gerald Corrigan - Managing Director, Goldman Sachs, former President of the Federal Reserve Bank of New York
Andrew Crockett - President, JP Morgan Chase
David Walker - Senior Advisor Morgan Stanley
Guillermo de la Dehesa - Director and Member of the Executive Committee, Grupo Santander
Arminio Fraga Neto - Partner, Gávea Investimentos
Domingo Cavallo - Chairman and CEO, DFC Associates, LLC
Martin Feldstein - President, National Bureau of Economic Research
Paul Krugman - Professor of Economics, Woodrow Wilson School, Princeton University
Lawrence Summers - Charles W. Eliot University Professor, Harvard University
Ernesto Zedillo - Director, Yale Center for the Study of Globalization, Yale University, and former President of Mexico
Gerd Häusler - Vice-Chairman Lazard International
Abdulatif Al-Hamad - Chairman, Arab Fund for Economic and Social Development
Montek Singh Ahluwalia - Deputy Chairman, Planning Commission, India
Mario Draghi - Governor, Bank of Italy
Timothy F. Geithner - President, Federal Reserve Bank of New York

But I'm sure there's no conspiracy involved here. No not at all. Just a bunch of banker guys getting together to talk about money.

Goldman Sachs über alles

I've written previously about the political power of Goldman Sachs and how they have used that power during this financial "crisis" to increase their standing in the economic world in my article "Goldman Sachs: Wall St. Gangstas". Now lest you think that I have become obsessed with the GS gang, let me assure you that I have not.

But there is that principle that says that once you begin to become newly aware of something, then you will begin to see it everywhere. It's not that these objects magically appear, it is just that something you would not have payed attention to before suddenly gets your attention. For instance, lets say that you have just decided to buy a hybrid car. Suddenly you realize just how many of these vehicles are on the road, whereas before you hadn't payed any attention to it. It's not that they suddenly appeared out of nowhere, it's just that you were busy focusing on other things. After all, how much information are we exposed to everyday, and how much of that do we process and bother to remember?

So it is with me and Goldman Sachs. Today I was doing some research on the Federal Reserve, and decided to go to the website of the Federal Reserve of New York. There I found a page that has an org chart of the New York Fed.

At the top of that org chart is the Chairman Stephen Friedman. And if you click on that link you'll find that he is a former chairman of Goldman Sachs. Wow, just like Secretary of the Treasury "Hank" Paulson. What a coincidence, or not!

The Federal Reserve consists of 12 regional banks, but it is widely accepted that the most powerful of these regional banks has always been the New York Fed. And if you think that might have changed through the years then how about this.

The Federal Open Market Committee (FOMC) created under 12 U.S.C. § 263 comprises the seven members of the board of governors and five representatives selected from the regional Federal Reserve Banks. The FOMC is charged under law with overseeing open market operations, the principal tool of national monetary policy.

So there are 5 representives from the regional Federal Reserve Banks on the FOMC which directly determines monetary policy, like setting interest rates and deciding whether to let Lehman Brothers go bankrupt or whatever. But there are 12 regional banks so obviously some are not going to be represented. What's the Fed to do?

The Federal Reserve Bank of New York president always sits on the Committee, and the other presidents serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco.

So the New York Fed has a permanent seat, kind of like the US has a permanent seat in the UN Security Council. It sure looks like the New York Fed is still king of the hill to me. But if you are still not convinced then here it is stated plainly and simply.

Since the founding of the Federal Reserve banking system, the Federal Reserve Bank of New York in Manhattan's Financial District has been the place where monetary policy in the United States is implemented, although policy is decided in Washington, D.C. by the Board of Governors of the Federal Reserve System. The New York Federal reserve is the largest, in terms of assets, and the most important of the twelve regional banks. Operating in the financial capital of the U.S., the New York Fed is responsible for conducting open market operations, the buying and selling of outstanding U.S. Treasury securities.

The New York Federal Reserve is the only regional bank with a permanent vote on the Federal Open Market Committee and its president is traditionally selected as the Committee's vice chairman.

You can't argue with that. But now you will point out that it is the President and not the Chairman of the New York Fed who gets to vote. Well yes, but normally the President of a Corporation like the New York Fed will get its instructions from the Board and especially the Chairman of the Board. The President is after all appointed by the Board. So it looks like the GS gang is firmly in control at the New York Fed.

But wait, there's more

That's just one detailed example of the power and influence of the GS gang in government and in the Federal Reserve. Remember that the Federal Reserve is a private corporation and not part of the US government. Although of course the Fed does hold substantial power over the government by setting the monetary policy, and conversely the Board of Governors is appointed by the President with Congressional approval. But once appointed the Board of Governors is independent of the Government. And the terms of appointment are for 14 years. Just imagine if we had Presidential elections every 14 years. How responsive do you think the President would be to the American People under those circumstances?

Here are some more examples of Goldman Sachs power taken from the article "The Goldman touch". (I have also posted a copy of this article on my blog for safe keeping in case the link gets stale.)

• Henry "Hank" Paulson - Current Secretary of the Treasury of the US, former Chairman and CEO of Goldman Sachs. OK, you already knew that one.
• Mark Carney - Governor of the Bank of Canada. Before joining the public service, Carney had a thirteen-year career with Goldman Sachs in its London, Tokyo, New York and Toronto offices. He was heavily involved in Goldman Sachs's work with the Russian financial crisis of 1998.
  
• Mario Draghi - Governor of the Bank of Italy. He was a London-based partner at Goldman from 2002 to 2005.
  
• John Thain, who once ran Goldman's mortgage desk, was hired late last year to take over troubled Merrill Lynch & Co. Mr. Thain was running the New York Stock Exchange at the time of his hiring.
  
• Joshua Bolten, took over April 14, 2006, as President George W. Bush's Chief of Staff "with authority to do whatever he deemed necessary to stabilize Bush's presidency, and he has moved quickly with changes". He was Executive Director for Legal and Government Affairs at Goldman Sachs in London from 1994 to 1999.
  
• Robert Steel was appointed by Paulson to be Under Secretary for Domestic Finance. He was lured away from Mr. Paulson's Treasury to resuscitate Wachovia Corp., the fourth-largest U.S. bank. (Or at least they were before they collapsed.) Mr. Steel is a former Goldman Sachs Vice Chairman.
  
• Paulson replaced Mr. Steel with Ken Wilson, the head of Goldman Sachs's financial services group. The Wall Street Journal describes him as, "The Goldman Sachs Man Behind Your Bailouts". I particularly liked this qoute, "[he] will be unpaid until Jan. 1, at which point Wilson will return to Goldman Sachs." So he is working on the bailout as a charity project. Right.
  

But here's what I really found startling from "The Goldman touch" article.

The same phenomenon is visible in other countries, as well. Indeed, there were three ex-Goldman executives at the table in April when the Group of Seven finance ministers and central bank governors turned their attention fully to the credit crisis at a meeting in Washington.

Along with Mr. Paulson, there was Mr. Carney, who had taken up his job as head of Canada's central bank only a couple of months earlier, and Bank of Italy Governor Mario Draghi, who was a London-based partner at Goldman from 2002 to 2005. Mr. Draghi also leads the influential Financial Services Forum of central bankers and regulators, which spent six months preparing the report that became the basis of the G7's demands for more transparency by banks and other regulatory changes.

But is there some sort of nefarious conspiracy here? No, of course not according to the article.

Of course, this cloistered culture, populated as it is by power and wealth, has roused its share of suspicion among outsiders, who view the firm as a kind of secret society – just do a Google search on “Goldman Sachs and conspiracy.”

Current and former Goldmanites dismiss the notion that the spread of former executives to positions of influence is a Machiavellian plot to further enrich the company. There are no secret handshakes, they insist; no covert collaboration to extend the firm's reach.

Oh, I feel much better now.

The Goldman Touch from Globe and Mail

I found this article from Canada's Globe and Mail to be particularly interesting. It reveals the absurd amount of ex Goldman Sachs executives in positions of power in Governments and Central Banks around the world. Since I've been burned recently by links that get stale, I decided to copy the article in toto for safe keeping. If time permits I will write my own article about this concentration of power and reference this one.

-----

The Goldman touch
KEVIN CARMICHAEL AND SINCLAIR STEWART
From Saturday's Globe and Mail
Friday, September 12

OTTAWA, NEW YORK — Back in his investment banking days at Goldman Sachs Group Inc., Henry Paulson took just three weeks to orchestrate the 2005 takeover of Gillette Co. by Procter & Gamble for $57-billion (U.S.).

Last weekend, as U.S. Treasury Secretary, he engineered one of the biggest financial bailouts in history, putting up as much as $200-billion of taxpayers' money to seize control of mortgage giants Fannie Mae and Freddie Mac. Now, he's facing pressure to pull off a deal to save the cratering Lehman Brothers.

Mr. Paulson's around-the-clock salvage missions to prop up pillars of the U.S. financial system are part of a worldwide scramble to contain the fallout from America's catastrophic dalliance with subprime mortgages. As the U.S. teeters on the precipice of recession and global economies seek to claw their way out of the grip of the crisis, both the public and private sectors are increasingly turning to one source for help: Goldman.

While the Treasury Secretary is leading the charge, there are at least a dozen other former Goldman executives who are doing mop-up jobs around the world in government and the financial sector, including Bank of Canada Governor Mark Carney; John Thain, who was hired late last year to take over troubled Merrill Lynch & Co.; and Robert Steel, who was lured away from Mr. Paulson's Treasury to resuscitate Wachovia Corp., the fourth-largest U.S. bank.

The plethora of former Goldman bankers in positions of influence right now isn't going unnoticed, even by their fellow travellers in the corridors of power. “It comes up over casual discussion and over dinner that Goldman Sachs and its alumni seem to have substantial influence in many positions,” acknowledged Finance Minister Jim Flaherty.

The full measure of that influence has become more apparent in recent months, as governments and financial companies around the world scramble to contain the damage from a credit meltdown that many observers predict will result in losses approaching $1-trillion.

That raises an obvious question: Why is Goldman playing such an outsized role in the salvage efforts?

Public service

Observers will point to the firm's near obsessive focus on recruiting, which has seeded its ranks with an enviable roster of talent, ripe for the poaching. They will highlight Goldman's record of public service over the past six decades, and the succession of leaders who were encouraged to cap off their lucrative Wall Street careers with a stint in government. And of course, they will reference the company's unparalleled command of risk: In an era where most of its blue-chip peers have been torched by lax lending standards and questionable bets – think Citigroup, Bear Stearns, UBS and Lehman, to name a few – Goldman has emerged with merely a few singes.

All of these factors go some way toward explaining the ascendancy of so many Goldman alumni amid the debris of the credit crisis. Yet the nature of the crisis has also played a role. Much of this disaster was manufactured on Wall Street, and it is here, at the epicentre of the U.S. financial system, that much of the punishment is being meted out. Given the complexity of the products underlying the collapse of the subprime mortgage market and the potential for a devastating domino effect if some of these major banks fail, it's little surprise that officials in both the public and private sectors have looked to industry experts for help. And where better to turn than the investment bank that managed to sail through the downturn reasonably intact?

“There are lots of people around the table who have extensive experience in central banking and traditional banking,” explained Mr. Flaherty, speaking of his government peers. “There is significantly less experience in investment banking.”

Goldman's involvement in public service goes back to Sidney Weinberg, a mail-room employee who scratched his way up the corporate ladder until taking the firm's reins in 1930 – a position he would hold for almost 40 years. Mr. Weinberg, considered the father of the modern-day Goldman Sachs, opened a revolving door between the firm and Washington by serving the administrations of Franklin Roosevelt, Harry Truman and Dwight Eisenhower during the Second World War and the Korean War.

He was an enthusiastic vice-chairman of the war production board, and became known as the “Body Snatcher” for aggressively recruiting fellow executives to volunteer their time to the war effort.

“Mr. Weinberg really believed in it, and he taught that message explicitly,” said Charles Ellis, whose book The Partnership: The Making of Goldman Sachs will be published this fall.

Continuing the tradition

Mr. Paulson is the latest in a parade of senior Goldmanites, including Robert Rubin and Stephen Friedman, who dutifully followed Mr. Weinberg's example.

He reluctantly left his post as Goldman's CEO in May, 2006, to go to Washington for the final 21/2 years of George W. Bush's presidency, after being lobbied aggressively by Joshua Bolten, the president's chief of staff. Mr. Bolten, incidentally, was executive director of legal affairs for Goldman's European operations from 1994 to 1999.

Once in Washington, Mr. Paulson continued the Goldman tradition, summoning his former colleague, Mr. Steel, to be his deputy in charge of financial markets.

Mr. Paulson also drafted Neel Kashkari from Goldman's San Francisco office as an adviser. When Mr. Steel unexpectedly departed for Wachovia this summer, Mr. Paulson turned to Ken Wilson, the head of Goldman Sachs's financial services group, to advise him until the Bush presidency ends in January.

The same phenomenon is visible in other countries, as well. Indeed, there were three ex-Goldman executives at the table in April when the Group of Seven finance ministers and central bank governors turned their attention fully to the credit crisis at a meeting in Washington.

Along with Mr. Paulson, there was Mr. Carney, who had taken up his job as head of Canada's central bank only a couple of months earlier, and Bank of Italy Governor Mario Draghi, who was a London-based partner at Goldman from 2002 to 2005. Mr. Draghi also leads the influential Financial Services Forum of central bankers and regulators, which spent six months preparing the report that became the basis of the G7's demands for more transparency by banks and other regulatory changes.

But Mr. Weinberg's legacy of public service is only part of the story. Many large banks, which suffered crippling (and self-inflicted) blows from the mortgage debacle, are mining the Goldman alumni network to help reverse their fortunes. Unlike Mr. Paulson, whose salary now is a relative pittance, the Goldmanites choosing to stay on Wall Street stand to make hundreds of millions of dollars in the biggest clean-up job since the Great Depression.

Merrill Lynch tapped Mr. Thain, who once ran Goldman's mortgage desk, to right a ship left listing by former chief executive Stan O'Neal, who presided over an $8.4-billion loss related to bonds backed by home loans and other assets. Mr. Thain, who was running the New York Stock Exchange at the time of his hiring, began his latest job by poaching several of his former Goldman colleagues and empowering the risk management division – a core strength of the Goldman operation.

At Wachovia, Mr. Steel's debut earned raves from analysts as he chopped the bank's dividend and wrote off billions in ill-advised loans within his first month on the job. Mr. Steel also looked to his old firm for advice on what to do with his bank's $122-billion of adjustable-rate mortgages, many of which are in danger of default because the loans are worth more than the homes they bought.

Managing the risk

It's easy to see the attraction to the Goldman men.

Goldman scrutinizes risk from every angle, often in raucous meetings involving traders and the most senior executives. Goldman's risk management officers are often drawn from the ranks of the traders, and they are paid a salary to match. In addition, bankers say risk management is given a prominent voice not merely in downturns, but in good times as well – something that was clearly not the case at many other large investment banks.

“We are a little better,” Lloyd Blankfein, Goldman's 11th chief executive, said in an article published by Fortune magazine in March. “I will fight you if you say we're just like everyone else. But I think it's only a little better. It's not as much as recent events would suggest.”

This appears an overly modest assessment. Last year, as many of its competitors began to falter, Goldman made a savvy bet that the housing market would fall. The firm's traders borrowed massive amounts of securities linked to mortgages, correctly guessing they could settle the trade at lower rates as prices tumbled. The strategy paid off handsomely, and helped Goldman produce a record profit of $11.6-billion last year.

“Goldman Sachs is like General Electric, they train good managers,” said Peter Morici, a business professor at the University of Maryland. “It's just always been that way.”

Inevitably, when observers attempt to describe what distinguishes Goldman, they use the word “culture.” That can include risk, or tradition, or even the centrality of recruiting.

Mr. Ellis, the author of the forthcoming book on Goldman, says the company's talent roster is the result of a methodical, rigorous hiring process.

The vetting of recruits can involve more than a dozen interviews with executives from all facets of the company. If one disapproves, you likely are out.

Then there are the questions themselves. Recruiters have been known to toss out all kinds of curveballs, including this one: “If your favourite baseball team is in the World Series, what betting strategy would you have to deploy at even odds to be up a net $100 if your team wins and down a net $100 if your team loses?” (Hint: the World Series can last four, five, six or seven games and it helps to know something about option price theory.)

Prima donnas not welcome

The idea is to find people who will excel as part of at team. The star system is sternly discouraged at Goldman. Prima donnas hoard resources for their own trading or business strategies, and that can distract from the ultimate mission: the firm's long-term profits. This tends to encourage hiring from the ranks of the military and college sports, “people who are used to hierarchies,” said one former Goldman banker, who spoke on condition of anonymity. “They're not necessarily the smartest, but they know how to harness the resources most effectively.”

Mr. Paulson, for example, was a standout football player at Dartmouth College and Mr. Carney was a backup goalie on Harvard University's varsity hockey team. Mr. Wilson served in the Vietnam War.

“Teams perform better than stars, is their motto,” says Roy Smith, a professor of finance at New York University and a partner at Goldman Sachs from 1966 to 1987.

Mr. Ellis, meanwhile, describes the culture at Goldman Sachs as “almost … tribal, in a positive sense.”

Of course, this cloistered culture, populated as it is by power and wealth, has roused its share of suspicion among outsiders, who view the firm as a kind of secret society – just do a Google search on “Goldman Sachs and conspiracy.”

Current and former Goldmanites dismiss the notion that the spread of former executives to positions of influence is a Machiavellian plot to further enrich the company. There are no secret handshakes, they insist; no covert collaboration to extend the firm's reach.

Certainly, few of them need the money. One of the reasons Goldman partners have been able to migrate to public service is the sheer amount of wealth they have accumulated by a relatively young age.

Mr. Paulson, for example, made $38.8-million in 2005, his last full year at Goldman, and amassed a personal fortune that is estimated to be worth well in excess of $500-million.

Mr. Blankfein, the current chief executive, made $68.7-million in 2007, a record for a Wall Street chief executive. Goldman's total compensation was $20.2-billion last year, almost enough to buy the Bank of Montreal at its current stock price. That works out to approximately $661,490 for each of the firm's 30,522 employees.

“By the time these people are in their late 40s or so, they may feel they want to do something else,” Prof. Smith said. “They are very well off financially and free to do whatever they want.”

Giving a little back

Goldman employees, however, say the firm places considerable emphasis on giving some of it back. The company itself donated more than $100-million to charitable endeavours in 2007. It also grants workers one day a year for volunteer work. Almost 21,000 Goldman Sachs employees and family members did so last year.

“They do more giving philanthropically, more anonymously, than any other firm,” says Mr. Ellis, who has worked with Goldman Sachs for decades as founder of Greenwich Associates. “It's stunning when you compare Morgan Stanley, Merrill Lynch, Credit Suisse – go down the list. It's very much stronger at Goldman Sachs than anywhere else.”

Not everyone is so enamoured of the Goldman mystique.

Brad Setser, a former economist at the U.S. Treasury under Mr. Rubin and now a fellow at the Council on Foreign Relations in New York, accepts that both Mr. Rubin and Mr. Paulson have the right background to fix a disruption in financial markets. But he's skeptical that a Treasury Secretary with a different background would have performed any worse.

“Goldman doesn't have a monopoly on smart people,” Mr. Setser says.

Still, Mr. Paulson's efforts to combat the crisis bear the distinct imprimatur of a deal maker.

The bailout of Fannie Mae and Freddie Mac was remarkable because it broke with the free-market ideology that guided the Bush administration's economic policy before Mr. Paulson's arrival.

Mr. Bush spent most of his presidency trying to limit the government's exposure to Fannie and Freddie, the largest sources for U.S. home financing. Now, as a result of Mr. Paulson's influence, he will leave the White House as the president who stopped just short of nationalizing the institutions.

It's not the result Mr. Paulson sought. His goal was to stabilize the housing market, which couldn't be done, most observers say, without a Fannie and Freddie in sound enough shape to purchase and resell mortgages. As incremental steps to restore confidence in the companies failed, Mr. Paulson set aside his beliefs in order to get a deal.

Mr. Paulson – along with Mr. Steel – was also among the group who advised Federal Reserve Board chairman Ben Bernanke to take on the risk associated with Morgan Stanley's purchase of investment bank Bear Stearns, avoiding the complete collapse of one of the U.S.'s most storied financial institutions. His actions are being criticized by some academics and politicians for using taxpayers' money to save private interests from mistakes for which they deserve to be punished – the moral hazard argument.

Mr. Paulson ignored the criticism and trusted his instincts and knowledge of financial markets. Mr. Paulson is intimate with the way Wall Street works and continues to tap “a long list of informants” to get reports directly from the front lines, Prof. Smith says. “I know a couple of bond traders who told me they had been called by Paulson on the phone to say, ‘What do you think about this market?'” he says. “That's not something these other guys would have done.”

It will take years to understand the full impact of the solutions wrought by Mr. Paulson, Mr. Draghi, Mr. Carney and others.

In Mr. Paulson's case, the decisions he takes this weekend regarding Lehman will go a long way to determining his legacy. His efforts as a firefighter have generally drawn praise, especially since he's managed to find a solution acceptable to both Democrats and Republicans.

Still, he hasn't been able to shake the criticism that he's been too kind to his old friends on Wall Street, raising the risk of moral hazard to a new level. A decision to remain an adviser this weekend, rather than a financial backer, would silence some of those critics. “If you are a practical investment banker turned into a public official, you intervene to prevent the thing from getting a whole lot worse,” Prof. Smith said. “It's better to act first in the time of a crisis than it is to not.”

Congressman DeFazio says NO BAILOUT

Friday's House vote in favor of the Paulson Bailout Bill was of course a huge disappointment. I predict that it won't be long before those who voted for this bill will go running for cover. Just like Hillary Clinton and Joe Biden have done with the Iraq War Declaration.

If you watched the VP debate then you got a refresher on what that defense strategy looks like. Palin accused Biden of hypocrisy on the Iraq War because he voted for it. Biden responds that he didn't vote for war but just for authorizing war as a last resort to give the President a bargaining tool. Or something like that. It's like when your kid gets caught with their hand in the cookie jar and says that he wasn't going to eat the cookie, he just wanted to feel the cookies and make sure one of their siblings hadn't eaten them.

Do you think Biden's argument would stand up in a court of law? How about a War Criminals Court? I can tell you that I'm not convinced by his arguments. Yet many Americans do seem to swallow these stories. They say that the Congress was misled by the President on the issue of WMDs. Again, I'm not buying it. This was just the politically easy thing to do because the Bush Administration and the MSM (Mainstream Media) were constantly beating the war drums, and the American Public was looking for blood.

I say the American Public instead of the American People purposefully in order to make a distinction. The American Public is the dumbed down version of the American People. They are the result of the constant stream of propaganda from the MSM. The American People on the other hand have a good heart, and believe in the American ideals of freedom and justice and democracy.

On Monday of last week we saw the power of the American People. They flooded their Representatives in Congress with calls and emails against the Wall St. Bailout. As a result the House voted by a narrow margin against the bailout. But by Friday the American Public had been swayed by the constant fear mongering from the media and had a slight change of heart. It was enough to allow passage of the bill, even though Friday's version of the bill was if anything worse since it was bloated with pork barrel amendments.

Helping to push the bill through Congress were Obama and McCain, or is it McBama and O'Cain. It's getting to the point where I can't tell the difference anymore. Both Presidential candidates strongly supported the bill. Obama was instrumental in swaying some members of the Congressional Black Caucus into changing their votes. This is not "change" and this is not the kind of leadership that America needs in the 21st Century. This is just more of the same.

There was some good news from last week's debacle. It wasn't just Dennis Kucinich and Ron Paul speaking out against this bill. Their voices were joined by many others. I want to highlight one of those who particularly impressed me during this legislative battle.

Representative Peter DeFazio (Democrat - Oregon)


Peter DeFazio is a Representative from Oregon. He proposed an alternative to the Paulson Bailout Bill called the No Bailouts Act. Here is DeFazio with Representative Marcy Kaptur from Ohio on Lou Dobbs describing the No Bailouts Act.



And here is Congressman DeFazio saying that the Paulson Bailout Bill is being justified by the threat of "Financial Weapons Of Mass Destruction". Sounds a lot like the Iraq War, doesn't it?



It's interesting that Peter has been in Congress since 1987 and is Oregon's most senior member in Congress, yet he is not the head of any Committee in Congress. Could it be that the Democratic Congressional leadership doesn't like the way that Peter plays ball?

In my article "10 signs that the End of Democracy is near", there is a video of DeFazio decrying the secrecy surrounding the Homeland Security Department's Continuity of Government (COG) plan. COG is essentially a codeword for Martial Law in the event of a national emergency. Like for instance a financial meltdown. Pete DeFazio has shown that he is no stranger to controversy in the past, and is not afraid to speak out for the American People. Here is the video again for easy reference.