Wall Street Dominos Start to Fall

The Associated Press reports that Bears Sterns hedge fund managers

Ralph Cioffi and Matthew Tannin were accused of encouraging investors to stay in their hedge funds, heavily exposed to subprime mortgages, even as they knew the credit market was in serious trouble.

AP puts this in the context of wider action...

The arrests came as the Justice Department in Washington announced the indictments of more than 400 players in the real-estate industry since March in a crackdown on mortgage fraud. Sixty were arrested on Wednesday alone.

It's hard to say this is honest justice when we know that the system and culture is corrupt to the core. We saw similar actions of "justice" when Enron, Arthur Anderson and others were in the spot light... but there doesn't seem to be a deterrent effect.

It has been noted that "if it pays, it plays" in regard to illegal activity. In addition to jail time, we need to focus on getting the money back that has been stolen. If that means liquidating big player corporations, and paying off the workers who will have to find new jobs, then so be it.

The corporate elite has robbed us every decade via a system that allows it. When John Edwards becomes the next Attorney General, we need to pressure him to change the system. That will be a true test of Obama's mouthing of the word "change."

Sources:

Associated Press, 2 charged on Wall Street in mortgage meltdown, June 19, 2008.

US: Isolated and Living in Gated Communities

I've written about an analogy between the United States and Bear Stears, in which the other nations abandon the US to be cannibalized. This general theme was getting air play on MSNBC this morning.

First, the MSNBC business reporter noted that, during her recent international travels, representatives from other nations expressed disfavor with what they perceived to be US finger-pointing on current economic problems of food and petrolium prices among other things. She noted that the G-8 nations no longer feel the US has any legitimacy as a gate-keeper to that group. Most interesting, she mentioned the other nations recently met without the US present.

Later, Zbigniew Brzezinski was interviewed, by his daughter who was anchoring for MSNBC. Brzezinski said that US policy is leading toward isolation and a state of living in a figurative "gated community."

In other words, the rest of the world is likely to not only turn its back on the US, it is likely to organize their policy positions to drive the US out of business as the presumptive world leader.

I'll end with an observation about the MSNBC self-promo piece I saw this morning. It in effect seemed to say, "We're informing you, not to keep the US in the position of world leader, but to ensure the Nation simply survives." Since I don't have cable, and rarely watch MSNBC, I'm curious whether others have seen this ad.

Mexico and Venezuela Cut Back Oil Deliveries to US

Bush can't deliver. He was rebuffed, again, buy Saudi Arabia who refused to expand their oil production at Bush's request. Saudi Arabia did, however, spill out a little embarasing information. According to the AP:

Saudi oil minister Ali al-Naimi said the kingdom decided on May 10 to increase production by 300,000 barrels a day to help meet U.S. needs after Venezuela and Mexico cut back deliveries.

Did I hear that right? Maybe one has to read the shipping news to know that Mexico and Venezuela cut back deliveries to the US. How vulnerable is the US to deeper cut backs?

I'm reminded of Bear Stearns. We found out that they had a foul reputation among other Wall Street firms for their dirty tactics. The word is that Bear Stearns was effectively sacrificed by the other titans of finance in a drastic measure to stabilize the financial sector.

One has to wonder whether a similar analogy is taking form on a global scale, with the US, and its foul reputation abroad, playing the role of Bear Stearns. It's not too hard to imagine the other nations isolating themselves from a US economic implosion for their own survival.

Sources:

Associate Press, Bush fails to win Saudi help on gas prices, TERENCE HUNT, AP White House Correspondent

Socialize Risk and Dump it on the Tax Payer

This is worth repeating:

Referring to the Bear Stearns financial "assistance," provided by the Federal Reserve, ... er, I mean the tax payer, Senate Banking Committee chairman, and unsuccessful Democratic presidential nominee, Senator Christopher Dodd had this to say:

What it looks like, if I had to frame this to people is that, we've socialized risk and privatized reward.

I don't think it's an original quote, but you don't see it spoken by a US Senator on corporate media too often.

Contact the Banking Committee to express your support of this statement by Dodd.

Sources:

AFP, US senators worry about taxpayer exposure to Bear Stearns, April 3, 2007.