FedUpUSA

Archive for April, 2010

Goldman Sachs, Chess, and the Godfather

By Damon Vrabel 

Between the SEC charges and the congressional panels, the government is finally doing its job going after Goldman Sachs, right?  And this last week in April ends with the Justice Department picking up the baton, which puts Goldman under threat of criminal prosecution.  Things have suddenly gotten serious.

Two weeks ago on a radio interview, I suggested the SEC investigation will either be a chump charge to pacify the masses or it might potentially be the beginning of the sacrifice of Goldman Sachs for reasons explained below.  The Justice Department referral makes the latter more probable.  Criminal prosecution is indeed appropriate.  Goldman deserves to be broken up.  In fact, all banks of that size need to be broken up so that power is passed down to state and local economies, and countries are no longer held hostage by the mega firms.  Is that what is happening here?  Are we being saved from the financial parasites that have destroyed our economy?

Childlike Perspective:  Left vs. Right

The left thinks so.  The major media establishment is suddenly, as if by script, trumpeting the idea that government is cracking down on boogie man Goldman Sachs.  This view says, “Yey! Our good government servants that have our best interests at heart are fixing those greedy Wall Street parasites.”  That’s the entire purpose of the congressional panels—a stageshow for the Wall-Street-funded media to promote this narrative. But those very same government officials were the ones who did what Goldman Sachs representatives and the real powers behind Wall Street told them for the last 20+ years.  They still get all of their money from Wall Street.  Have they suddenly turned on the very people who feed them?  Of course not.

The right thinks this crackdown is bad because Wall Street and Goldman represent a benevolent free market.  This view goes beyond childlikeness and approaches insanity, like Goldman CEO Lloyd Blankfein thinking of himself as an angel from God.  Wall Street, the Fed cartel, is a government creation.  There is nothing “free market” about it.  It is the most powerful monopolized cartel in the history of the world.  Conservative media mouthpieces who trumpet Wall Street do not have a clue about our monetary system.  They have never looked beyond the false religion of neoclassical economics, which conveniently ignores the issue of money.

Conclusion: rule out the simplistic view of the left and right.  The Washington DC government has served Wall Street and big business for decades.  There is no divide between big government and big business.  They go hand in hand.  Neither could exist without the other.

Adolescent Perspective:  “They’re All Criminals”

Another group of people, far more accurate than the left vs. right disciples, think that Wall Street is just a predatory bunch.  Bringing down Goldman Sachs would therefore be a good thing in their view.  But they think DC government is a predatory bunch as well.  They see through the salesmanship and PR pumped through the corporate media.  They understand that frat boy behavior creates a self-serving clique whether on Wall Street or in Washington DC.  In fact, they understand how the boys in both groups get their power from working together.  It is all one club. 

Conclusion:  as correct as this view is, it leaves us paralyzed.  Adolescents are brilliant at seeing through adult facades, but they may fail to see the higher level picture. 

The Godfather:  Who the Criminals Work For

The key to what is really happening is to understand that the suits we see on television are not in charge.  A bunch of random self-serving people would not be able to pull off strategic, coordinated plans—the adolescent view is only half correct.  There are people far above the pay grade of a senator like Chris Dodd or a wage servant like Lloyd Blankfein.  He may be the top operating officer at Goldman, but by definition that means he is a servant of the ownership class—the Anglo mafia—that controls all money in the system.  The fact that he earns a wage and gets a W2 at the end of the year means he and his firm are not in charge.

Goldman Sachs is effectively a capo regime.  It is a powerful player in a game of controlled chaos.  It was given a territory and was then expected to deliver the goods.  And Goldman delivered better than all the other capos in the system.  It reaped the rewards.  Goldman’s officers were paid better than any other regime throughout the last several decades.  Its hit men were the most productive. The most loyal—Rubin, Paulson, etc—have been inducted into the upper level circle around the Godfather and removed from the stressful street jobs that bring public scrutiny.  Those guys made their hundreds of millions and no longer care whether Goldman exists or not.  And from the Godfather’s perspective, there comes a time when capos have served their purpose.  At that point, their life is in danger.

“The Game of the Century:”  Bobby Fischer and the Queen Sacrifice

But capos typically are not sacrificed unless doing so would serve a Machiavellian purpose.  So what would be the purpose of sacrificing Goldman?  Well, in one of the more famous games in chess history, 13-year-old Bobby Fischer brilliantly pounced on his opponent and guaranteed victory by boldly sacrificing his queen on move 17.  The queen is the most powerful chess piece.  Average people would narrowly play a game defensively protecting their queen and assuming any chance to take your queen would lead to victory.  But that elementary view would be precisely the weakness upon which a true chess mind, a Godfather, would prey.  Beware of the bait being laid in front of you.

Goldman Sachs is very much analogous to a queen in the chess game being played by the ownership class—the richest pools of private capital controlled by multi-generational wealthy families that hover above countries via the central banking system.  It has been one of the most potent pieces on the board for many years, its most recent attack being on the entire nation of Greece.  But as the endgame comes into view, perhaps the most brilliant play to reach checkmate is now the queen sacrifice.  Goldman employees had better be sending their resumes to JP Morgan Chase—a critical chess piece in the endgame that will be protected at all costs.

The Great Global Restructuring

What is the end game?  The ownership class is attempting to restructure the world under a new financial system.  We have had a global currency for a long time—the US dollar—but it has run its course.  Wall Street has leveraged up the dollar as far as possible.  The dollar now holds most nations hostage thanks to the power of the bond market, the central banking system.  The ownership class needs a new debt-based currency and banking structure to maintain control as they pump the capital engine through the 21st century.  This is why the G20 is working feverishly to build up the IMF, BIS, and new global financial rules.  This time the production center will be China rather than the US, which is why China and Japan are the most asset-rich countries in the world while the western world is the most indebted.  The west is on track for decades of slow decline while Asia is on the verge of seeing “the rising sun.” 

So unfortunately the government vs. Goldman Sachs story has nothing to do with reforming Wall Street in the interest of average Americans. Rather it is a strategic move to further the endgame of consolidating Wall Street power, focusing public rage on Goldman to protect JP Morgan Chase, fueling new regulations to clamp down on the smaller banks that we so desperately need, and creating a global structure even bigger than the already “too big to fail” banking system.  This may be setting up one of the biggest, most successful queen sacrifices in history.  We should take the queen by all means—Goldman is a predator.  But heed the lesson from 13-year-old Bobby Fischer.  Be wary of checkmate.

Rep. Darrell Issa (R-CA) to GM on bailout shell game: “dangerously close to committing fraud,” “you might have colluded with the U.S. Treasury to deceive the American public”

As I reported several times already, the Obama administration, through its appointed CEO Ed Whitacre delivered a blitzkrieg of public advertising with supposed good news in claiming that GM had paid off its government TARP loan 5 years early and with interest. The intellectually non-curious MS regurgitated the talking points with nary a question. I had one one though – how could a company that hadn’t posted a profit since 2004 pay back anyone a single red dime? In fact, I was the first blogger, to my knowledge, to pose that GM paid back its government loan with other government loan money. Here are the hard facts as I have reported before:

1. There were essentially 2 bailout accounts, one an $8 billion loan and the other a $49.5 billion escrow account (like a line of credit), both from TARP funds
2. GM used the escrow TARP funds to pay the TARP loan
3. GM did this to get another $10 billion loan from the Department of Energy (see update on this post)

The FTC might get involved. Rep. Darell Issa of California is one of very few legislators that are essentially calling the shell game what it is – fraud, the other f-word. From The Detroit News: GM ‘close to commiting fraud’ in ad, lawmaker charges

…Rep. Darrell Issa, R-Calif., the ranking member of the House Oversight and Government Reform Committee, said in a letter obtained by The Detroit News today to GM chairman and CEO Edward Whitacre Jr. that the company “has come dangerously close to committing fraud and that you might have colluded with the U.S. Treasury to deceive the American public.”

GM’s ads featured Whitacre touting that fact that GM “repaid our government loan in full, with interest, five years ahead of the original schedule.”

Of course, GM declined to comment on Issa’s letter, but spokesman Greg Martin said that “our work is not finished, but repaying our loans with interest is a clear sign that our plan is working, and a critical step toward returning GM to profitability and public ownership.” GM hasn’t made a red cent in profit since 2004. Issa went so far as to argue that GM could face lawsuits if people purchased a GM vehicle based on the commercial. He also called the commercial “counterproductive and shameful.” The White House, of course, touted GM’s repayment as a sign of progress, ignoring the clear fact that they paid off one credit card with another credit card.

Related is this from Instapundit today:

TOM BLUMER: Fun with Numbers: GM ‘Payback’ of Taxpayer Loans. “Taking money from one bailout kitty to pay back another bailout fund.”

When I talked with Mark Tapscott yesterday, he called those GM bailout-payback commercials the most dishonest claims he’s seen in 30 years of covering politics and the auto industry. “It is a lie.”

UPDATE: A related video via Gateway Pundit:

h/t TheBlogProf

Culture of Deceit: Why Dick Fuld So Needlessly and Recklessly Perjured Himself Before Congress

“Truth is not only violated by falsehood; it may be equally outraged by silence.”

Henri-Frederic Amiel

Yet another whistle blower who has been completely ignored by the SEC just stepped forward to finally be acknowledged by the media.

A Bloomberg analyst reported around noon NY time that they had verified Mr. Budde’s story, and that indeed Dick Fuld easily had received cash in excess of $500 million in compensation for the period in question, higher than even Henry Waxman had asserted in his charts during Dick Fuld’s testimony.

Mr. Budde, a former counsel who was frustrated and plain fed up with the culture of personal greed and deceit among the Lehman executives stepped forward again to tell his story after being completely ignored by the SEC and the Lehman Board of Directors.

Now, I have some sympathy for Dick Fuld. I mean, when you are making the big bucks owed to a master of the universe, and you eat widows and orphans for breakfast, what does it really matter if it is $300 million, or $550 million, or even the one billion that some estimate was the true total compensation? What is a few hundred millions when you can afford to wipe your derrière with Cohiba cigars, and gargle with Cristal Brut 1990? (Oh yeah, that’s class, real class. I must finally be somebody, and not just some schmuck from the Bronx. I’ll show them, show them all.)

I know I have trouble keeping track of what I have exactly in my own wallet at times, especially after paying the kids a couple of quid to walk the dog. And $200 million is hardly a significant sum anymore in the rapidly expanding compensation universe change on Wall Street. There is the locus of Bernanke’s inflation, the FIRE sector, where the liquidity has been channeled, for years.

But what interests me most is why did Dick Fuld perjure himself over something to obviously verifiable, and largely irrelevant? Doesn’t he file tax returns? Did he mess up using Turbo Tax like other board members of the NY Fed are said to have done? Or was he just a little bit ashamed of taking huge sums from a company that he ran into the ground in a Ponzi scheme? On the other hand Goldman execs celebrate their bonuses and just love to roll in their own irrational greed. Perhaps it was just a slip, a bad habit, a automatic reflex.

Fuld was widely disliked on the Street, and when those sharks and sociopaths, who would sell their own mothers for an eighth, don’t like you there just have to be some serious personality issues involved.

But Dick is likely to be just another scapegoat, like Martha Stewart, in an escalating program to feed the relative small fry to the mob and the show trials, while the great bulk of the crime continues to be concealed.

And just so you don’t feel too sorry for the Dickster, on November 10, 2008 Fuld sold his Florida mansion to his wife Kathleen for $100; this may protect the house from potential legal actions and judgements against him. They had bought it only 4 years earlier for $13.56 million.

Still, one can only ask the question, and wonder, what a brave new world, that has such people in it, virtually running the regulators, the Congress, and the government for their own irrational benefit and obsessive greed.

Bloomberg
Fuld Understated Pay More Than $200 Million, Lehman’s Budde Says
By James Sterngold

April 29 (Bloomberg) — Before Lloyd Blankfein of Goldman Sachs Group Inc. took his place, Richard S. Fuld Jr.’s angry face was the universal symbol of Wall Street greed.

On Oct. 6, 2008, three weeks after Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history, Lehman’s former chief executive officer found himself before Representative Henry A. Waxman, the California Democrat who chaired the House Committee on Oversight and Government Reform. Waxman has stared down plenty of CEOs over the years, yet this had to be one of the most intense confrontations of his career.

“Mr. Fuld will do fine,” Waxman said. “He can walk away from Lehman a wealthy man who earned over $500 million. But taxpayers are left with a $700 billion bill to rescue Wall Street and an economy in crisis.”

Fuld said he was a victim, not an architect, of the collapse, blaming a “crisis of confidence” in the markets for dooming his firm. Reckless management had nothing to do with it. “Lehman Brothers,” he said, “was a casualty.”

Fuld and Waxman went on to disagree about just how much money Fuld had taken out of Lehman before it went under, Bloomberg Businessweek reported in its May 3 edition. Fuld, now 64, said his total compensation from 2000 through 2007 was less than $310 million, not the $485 million that appeared on Waxman’s chart. He said 85 percent of his pay was in Lehman stock that had become worthless. “I never sold my shares,” Fuld said at one point. At another, he said he had not sold the “vast majority” of them.

“That just seems to me an incredible amount of money,” Waxman responded.

Under Oath

Among those closely observing Fuld was a 49-year-old former Lehman lawyer named Oliver Budde who was watching the hearing at home on C-Span. Budde (pronounced Boo-da) was certain Waxman’s figures weren’t too high. They were too low, and he could prove it. Fuld, he believed, had understated the amount he was paid during those years by more than $200 million, and now he had done it under oath, for the entire world to see.

For nine years, Budde had served as an associate general counsel at Lehman. Preparing the public filings on executive compensation had been one of his major responsibilities, and he had been infuriated by what he saw as the firm’s intentional under-representation of how much top executives like Fuld were paid. Budde says he argued with his bosses for years over the matter, so much so that he eventually quit the firm. After he left, he couldn’t let the matter rest.

Contacting Regulators

He contacted the Securities and Exchange Commission and the Lehman board of directors and says neither showed interest in meeting him. He was so shocked by Fuld’s testimony in front of Congress that he started thinking about writing a book going public with his story, which is told here for the first time.

“I wasn’t surprised, because these guys don’t surprise me anymore,” Budde says. “But it just struck me — they’re doing it again. I wasn’t going to sit back and watch…”

When You’re A Kleptomaniac, Stealing Looks Normal

Posted by Karl Denninger

The WSJ has an interesting article that deserves some exposition:

As debate started in the Senate Thursday on the broad overhaul, some administration officials and lawmakers said they worried the amendments could backfire, steering lending and trading in complex financial instruments to hedge funds and other finance companies that are less regulated than banks. There are also fears that tight limits on U.S. banks could put them at a competitive disadvantage, because similar restraints don’t exist for their overseas rivals.

Notice the weasel in here.  One part (trading complex financial instruments) should be diverted to hedge funds and other unregulated – and free-to-fail, no-backstopped firms.

The other part (lending) will always be done by banks – you have one on the corner, or a credit union, that will write you a loan, yes? 

Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country’s deposits and put strict caps on the debt banks issue.

This is the amendment that I highlighted with two Tickers, one text and one, for the “visually inclined”, in video.  This amendment deserves to be law right now – one way or another.

Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

That plus the above would effectively BE Glass-Steagall. 

I like that a lot.

Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs. Mr. Sanders has more than a dozen co-sponsors.

Why should the administration fight such a thing?  What possible purpose – that doesn’t involve scams and fraud – is served by The Fed being able to operate in secrecy?

“Hopefully, common sense and maturity will take control, and the hyperbole and populism, while good for the TV cameras, will be put aside,” said Mr. Gregg said.

Mr. Gregg (and the rest of you) ought to read this (warning – not mine, and full of colorful language.  Not suitable for children and all that:)

“I’m sure you have the answer, you and Ron Paul and all the other pot-smoking libertarian do-gooders have it all figured out. But what I’m saying is, no confidence means end of the confidence game. That’s what Lehman showed. Every single player in finance suddenly had to face the fundamental problem—this whole fu!@ing economy is built on fraud and lies and garbage. So when Lehman collapsed, every single player panicked, going, ‘If Lehman was nothing but a Ponzi scheme—and I know what I’m running is a Ponzi scheme—holy shit, that means everyone else is running a Ponzi scheme too! Run for the exits!’ No one trusted anyone else, everyone pulled out, and the entire global economy collapsed just like that. And that meant your parents, my parents, every teacher, every fireman, every person in the country going into retirement, every price on every asset—wiped out.

Oh.  You mean that “if we scam and screw people enough, then you must let us keep doing that, lest we have riots or even civil war”?

That seems to be the argument that Judd Gregg and others – including Geithner and Obama – are putting forward.

Here’s the problem with the argument: It doesn’t work in the long haul.

It got a lot more vicious and personal than this, but when our verbal slap-fight ended—and he paid the bill—I thought about what he said, and it made a lot more sense. Fraud has become so endemic in this country that it’s woven its way into America’s DNA, forming a symbiotic relationship that can’t be undone without killing off the host. If they push it just a little too hard, the entire American economy could crash, asset values could tank, and that means tens of millions of extremely pissed off retirees and Baby Boomers. As the Wall Streeter put it: “Whoever is responsible for bursting this latest bubble by exposing all the fraud—and tanking all the markets—will not only be out of power for at least a generation, but they’ll all have to get radical reconstructive surgery on their faces and seek political asylum somewhere remote. No one wants to be that guy, and that’s why it’s not going to happen.”

That may be true, but all bubbles to eventually burst, all Ponzi schemes do collapse. The only question is when. For those of us not on the verge of retiring, the sooner we have this day of reckoning and get it over with, the better.

What the author forgets is that for those who are on the verge of retiring, you’d be better off getting it over with now and choosing not to retire, than having it happen once you do and being completely and irredeemably hosed.

In case you’ve forgotten, this isn’t uniquely (or even largely) the fault of one political party or the other.  It’s both.

But here’s the key: The party that does not put a stop to this and gets tagged with obstructing locking all these ignoble, felonious bastards up will be the one that – at best – never darkens the halls of Congress or The White House again.

The Big Alienation

By Peggy Noonan

Uncontrolled borders and Washington’s lack of self-control.

We are at a remarkable moment. We have an open, 2,000-mile border to our south, and the entity with the power to enforce the law and impose safety and order will not do it. Wall Street collapsed, taking Main Street’s money with it, and the government can’t really figure out what to do about it because the government itself was deeply implicated in the crash, and both political parties are full of people whose political careers have been made possible by Wall Street contributions. Meanwhile we pass huge laws, bills so comprehensive, omnibus and transformative that no one knows what’s in them and no one—literally, no one—knows how exactly they will be executed or interpreted. Citizens search for new laws online, pore over them at night, and come away knowing no more than they did before they typed “dot-gov.”

It is not that no one’s in control. Washington is full of people who insist they’re in control and who go to great lengths to display their power. It’s that no one takes responsibility and authority. Washington daily delivers to the people two stark and utterly conflicting messages: “We control everything” and “You’re on your own.”

This is not the old, conservative and long-lampooned “I don’t trust gummint” attitude of the 1950s, ’60s and ’70s. It’s something new, or rather something so much more broadly and fully evolved that it constitutes something new. The right never trusted the government, but now the middle doesn’t. I asked a campaigner for Hillary Clinton recently where her sturdy, pantsuited supporters had gone. They didn’t seem part of the Obama brigades. “Some of them are at the tea party,” she said.

None of this happened overnight. It is, most recently, the result of two wars that were supposed to be cakewalks, Katrina, the crash, and the phenomenon of a federal government that seemed less and less competent attempting to do more and more by passing bigger and bigger laws.

Add to this states on the verge of bankruptcy, the looming debt crisis of the federal government, the likelihood of ever-rising taxes. Shake it all together, and you have the makings of the big alienation. Alienation is often followed by full-blown antagonism, and antagonism by breakage.

Which brings us to Arizona and its much-criticized attempt to institute a law aimed at controlling its own border with Mexico. It is doing this because the federal government won’t, and because Arizonans have a crisis on their hands, areas on the border where criminal behavior flourishes, where there have been kidnappings, murders and gang violence. If the law is abusive, it will be determined quickly enough, in the courts. In keeping with recent tradition, they were reading parts of the law aloud on cable the other night, with bright and sincere people completely disagreeing on the meaning of the words they were reading. No one knows how the law will be executed or interpreted.

Every state and region has its own facts and experience. In New York, legal and illegal immigrants keep the city running: They work hard jobs with brutal hours, rip off no one on Wall Street, and do not crash the economy. They are generally considered among the good guys. I’m not sure New Yorkers can fairly judge the situation in Arizona, nor Arizonans the situation in New York.

But the larger point is that Arizona is moving forward because the government in Washington has completely abdicated its responsibility. For 10 years—at least—through two administrations, Washington deliberately did nothing to ease the crisis on the borders because politicians calculated that an air of mounting crisis would spur mounting support for what Washington thought was appropriate reform—i.e., reform that would help the Democratic and Republican parties.

Both parties resemble Gordon Brown, who is about to lose the prime ministership of Britain. On the campaign trail this week, he was famously questioned by a party voter about his stand on immigration. He gave her the verbal runaround, all boilerplate and shrugs, and later complained to an aide, on an open mic, that he’d been forced into conversation with that “bigoted woman.”

He really thought she was a bigot. Because she asked about immigration. Which is, to him, a sign of at least latent racism.

The establishments of the American political parties, and the media, are full of people who think concern about illegal immigration is a mark of racism. If you were Freud you might say, “How odd that’s where their minds so quickly go, how strange they’re so eager to point an accusing finger. Could they be projecting onto others their own, heavily defended-against inner emotions?” But let’s not do Freud, he’s too interesting. Maybe they’re just smug and sanctimonious.

The American president has the power to control America’s borders if he wants to, but George W. Bush and Barack Obama did not and do not want to, and for the same reason, and we all know what it is. The fastest-growing demographic in America is the Hispanic vote, and if either party cracks down on illegal immigration, it risks losing that vote for generations.

But while the Democrats worry about the prospects of the Democrats and the Republicans about the well-being of the Republicans, who worries about America?

No one. Which the American people have noticed, and which adds to the dangerous alienation—actually it’s at the heart of the alienation—of the age.

In the past four years, I have argued in this space that nothing can or should be done, no new federal law passed, until the border itself is secure. That is the predicate, the commonsense first step. Once existing laws are enforced and the border made peaceful, everyone in the country will be able to breathe easier and consider, without an air of clamor and crisis, what should be done next. What might that be? How about relax, see where we are, and absorb. Pass a small, clear law—say, one granting citizenship to all who serve two years in the armed forces—and then go have a Coke. Not everything has to be settled right away. Only controlling the border has to be settled right away.

Instead, our national establishments deliberately allow the crisis to grow and fester, ignoring public unrest and amusing themselves by damning anyone’s attempt to deal with the problem they fear to address.

Why does the federal government do this? Because so many within it are stupid and unimaginative and don’t trust the American people. Which of course the American people have noticed.

If the federal government and our political parties were imaginative, they would understand that it is actually in their interests to restore peace and order to the border. It would be a way of demonstrating that our government is still capable of functioning, that it is still to some degree connected to the people’s will, that it has the broader interests of the country in mind.

The American people fear they are losing their place and authority in the daily, unwinding drama of American history. They feel increasingly alienated from their government. And alienation, again, is often followed by deep animosity, and animosity by the breaking up of things. If our leaders were farsighted not only for themselves but for the country, they would fix the border.

Commentary

Courtesy of dataSlave

There is a PERMANENT government that acts to undermine and oppose the Will of the People as expressed through out elected representatives. This government consists of people who hold power for life and are not answerable to the public in any way shape or form. The two primary elements of the permanent government are bureaucrats and judges.

The bureaucrats are entrenched by ridiculous civil service protections and thug unions. They promulgate regulations that effectively have the force of law, yet require no endorsement from any elected body. Judges claim the ability to “interpret” law but effectively write the law in many cases. They have turned the plain meaning of many laws completely on their head (see the Civil Rights Act of 1965). There is almost no real check on their power.

It is the negation of representative government when the representatives deliberately abdicate power in such a fashion. This has been going on since the 1930s but really began in earnest in the 1960s. Government is not responsive to the people because so much of the power is held by those who are not accountable to the people. People are alienated because they are starting to see that their government is no longer theirs. In effect we no longer have a government but rather entrenched RULERS.

The $10 Trillion Climate Fraud

Al Gore is co-founder of an investment management firm that is now the fifth-largest shareholder in the Chicago Climate Exchange.

Cap-And-Trade: While senators froth over Goldman Sachs and derivatives, a climate trading scheme being run out of the Chicago Climate Exchange would make Bernie Madoff blush. Its trail leads to the White House.

Lost in the recent headlines was Al Gore’s appearance Monday in Denver at the annual meeting of the Council of Foundations, an association of the nation’s philanthropic leaders.

“Time’s running out (on climate change),” Gore told them. “We have to get our act together. You have a unique role in getting our act together.”

Gore was right that foundations will play a key role in keeping the climate scam alive as evidence of outright climate fraud grows, just as they were critical in the beginning when the Joyce Foundation in 2000 and 2001 provided the seed money to start the Chicago Climate Exchange. It started trading in 2003, and what it trades is, essentially, air. More specifically perhaps, hot air.

The Chicago Climate Exchange (CCX) advertises itself as “North America’s only cap-and-trade system for all six greenhouse gases, with global affiliates and projects worldwide.” Barack Obama served on the board of the Joyce Foundation from 1994 to 2002 when the CCX startup grants were issued. As president, pushing cap-and-trade is one of his highest priorities. Now isn’t that special?

Few Americans have heard of either entity. The Joyce Foundation was originally the financial nest egg of a widow whose family had made millions in the now out-of-favor lumber industry.

After her death, the foundation was run by philanthropists who increasingly dedicated their giving to liberal causes, including gun control, environmentalism and school changes.

Currently, CCX members agree to a voluntary but legally binding agreement to regulate greenhouse gases.

The CCX provides the mechanism in trading the very pollution permits and carbon offsets the administration’s cap-and-trade proposals would impose by government mandate.

Thanks to Fox News’ Glenn Beck, we have learned a lot about CCX, not the least of which is that its founder, Richard Sandor, says he knew Obama well back in the day when the Joyce Foundation awarded money to the Kellogg Graduate School of Management at Northwestern University, where Sandor was a research professor.

Sandor estimates that climate trading could be “a $10 trillion dollar market.” It could very well be, if cap-and-trade measures like Waxman-Markey and Kerry-Boxer are signed into law, making energy prices skyrocket, and as companies buy and sell permits to emit those six “greenhouse” gases.

So lucrative does this market appear, it attracted the attention of London-based Generation Investment Management, which purchased a stake in CCX and is now the fifth-largest shareholder.

As we noted last year, Gore is co-founder of Generation Investment Management, which sells carbon offsets of dubious value that let rich polluters continue to pollute with a clear conscience.

Other founders include former Goldman Sachs partner David Blood, as well as Mark Ferguson and Peter Harris, also of Goldman Sachs. In 2006, CCX received a big boost when another investor bought a 10% stake on the prospect of making a great deal of money for itself. That investor was Goldman Sachs, now under the gun for selling financial instruments it knew were doomed to fail.

The actual mechanism for trading on the exchange was purchased and patented by none other than Franklin Raines, who was CEO of Fannie Mae at the time.

Raines profited handsomely to the tune of some $90 million by buying and bundling bad mortgages that led to the collapse of the American economy. His interest in climate trading is curious until one realizes cap-and-trade would make housing costlier as well.

Amazingly, none of these facts came up at Senate hearings on Goldman Sachs’ activities, which may be nothing more than Ross Perot’s famous “gorilla dust,” meant to distract us from the real issues.

The climate trading scheme being stitched together here will do more damage than Goldman Sachs, AIG and Fannie Mae combined. But it will bring power and money to its architects.