Where the money went

I'm at a disadvantage with this economic meltdown. I don't have a good understanding of economics.

I don't even balance my checkbook. As the son of a bookkeeper I should be ashamed. I pay my bills, and I keep my credit card paid off. I have an approximate knowledge of what I spent versus what I have. At the end of the month I look at what's in my checking and if I need a little more I move a little from my savings. So far the mathematics police haven't busted me.

I have a vague understanding of how certain things happen on the bigger economic stage, and I can suss out the connection between foxes and henhouses. I have an appreciation that we are the chickens and our eggs are the eggs that are missing, and I have a general idea of who the foxes are, although the media doesn't necessarily identify the foxes individually (unless one fox is taking the fall for the others) or which eggs they ate or, most importantly, how the foxes got in the henhouse.

I welcome when I come across some information that gives me an "aha!" moment. So it was with this show summary from "For The Record: #531 Interview With Lucy Komisar about Offshore". It's a pretty detailed explanation of an interview from 2005 with Komisar, an investigative reporter, about the offshore banking business. The interview specifically revolves around AIG (American International Group, Inc.). Yes, that AIG, the huge banking/insurance business that went down hard. It was one of the first dominoes in our current click-clackety economic collapse. Granted, even with the explanation I'm still a little slow at following the dotted line, but repeated listenings should help me. (At the linked site there are several links to the actual interview in different formats.)

Here's the long short:

AIG was running a scam, parts of it certainly illegal, all of it unethical, called "captive" reinsurance companies. Reinsurance companies are a way to spread the potential losses. What AIG did was have an offshore subsidiary be its own reinsurance company, make sweetheart deals between the firms so that profits were hidden offshore and off the books in America, thus away from investors and the eyes of the government. It eventually left AIG itself exposed because it wasn't spreading the losses.

My "aha!" moment came as Komisar mentioned some of the various players on the AIG and Clearstream (a very unclear associated banking business) roster. For ex, Henry Kissinger was a board member; Robert Rubin, Clinton's Secretary of the Treasury, was in on the fun. You see how these kinds of players tended to insulate AIG from closer scrutiny by the government. Then there were the places where money was moved through on the way to the wrong people's pockets: "the role of the Clearstream network in the Banco Ambrosiano, October Surprise and BCCI scandals; the role of the Clearstream network in the financing of Al Qaeda and 9/11..." The Banco Ambrosiano Affair was also known as the Vatican Banking Scandal from back in the late seventies when lots of money disappeared and where the trail ended when a fellow named Roberto Calvi, known as "the banker of God," was found suicided. The Propaganda Due Lodge (known as P2 for short), a fascist secret lodge involved with criminality, terror and the CIA were also involved with the Vatican Banking Scandal. I'll presume the readers are either familiar with the other scandals or will google them.

AIG apparently had a history of involvement with the U.S. intelligence community, going back to the OSS and World War II. Bill Casey, a Wall Street banker and an old OSS man who followed his instincts into the CIA and who was Reagan's "campaign manager" during the 1980 (re: "October Surprise") election, wanted AIG top dog Maurice "Hank" Greenberg as Reagan's Secretary of the Treasury. By the time of this interview (2005), Greenberg was in the sights of New York's Attorney General, Eliot Spitzer.

You remember Eliot Spitzer? He was the "rude, cocky" Democratic Governor of New York who earlier this year had written an editorial for WaPo about the mortgage crisis and the Bush Administration's involvement in blocking the states from pursuing the criminals running mortgage scams. Spitzer had lots of enemies in high places on Wall Street. And then, surprise, surprise, the FBI, using powers legislated for our "War on Terror", found that Spitzer was illegally moving his own money from one of his accounts to another in order to pay a call girl. Spitzer was destroyed as a public figure and forced to resign from being Governor of New York.

And the mortgage crisis limped along for another six months.

Funny how justice works.

There was a book out years ago, Crimes Of Patriots by Jonathan Kwitney, about the Nugan Hand Bank, a CIA job that helped move money for covert, illicit and just plain illegal dealings that had the fingerprints of the intelligence community and its cadre of crooks. Nugan Hand was created to replace Paul Helliwell's Castle Bank, which had gone through those throes that crooked banks eventually go through. In fact, there are plenty of books about all sorts of criminal conspiracies involving banks and banking swindles, airlines flying weapons into places and drugs out of them, and the intertwining of these enterprises, which all seem to double back to our intelligence community (BCCI, Palmer Bank, etc.). And in every case the trail seems to get cold right about the time that the bigger fish should be frying. It's part of that creepy bit of our history we don't hear about in civilized circles.

Consider this family history: Prescott Bush was an intelligence officer in World War I who afterwards became a Wall Street banker. He went on to handle the Nazi portfolio for Brown Brothers Harriman before and during World War II (at least until it was seized under the Trading With The Enemy Act), and whose family fortune was considerably advanced after the war with the dissolution of a Nazi bank he had fronted (Union Banking Corporation). His son, George Herbert Walker Bush, long suspected of having a history as an agent with the CIA from his days at Yale (track down Anthony Kimery's work), who then became the Director of the CIA, was tasked by President Reagan to deregulate the savings and loans industry. Vice President Bush. Presto, a banking crisis! We remember how well Neil Bush and his friends cleaned up with the looting of Silverado Savings, but what we weren't shown were how many S&L frauds involved people with intelligence connections. Track down Steve Pizzo's book on the S&L ripoffs and try to count how many of the bank failures involved people with apparent connections to intelligence, the Republican Party, or both. This pattern seems to be repeating itself with this new great banking crisis.

I was not surprised to hear that Robert Rubin, Clinton's Treasury guy, had touched the hem of AIG's majestic robes. I have long had suspicions about Bill Clinton's career of public service. But that's for another time.

The interview, and my ragged interpretation of it here, isn't a clear bar graph of how this collapse happened or where the money went, but it should at least suggest where to be looking and why nobody in the media looks there. At some point during our Cold War paranoia our intelligence agencies became a giant get-out-of-jail-free card for a whole community of scalawags.

Even when the evidence points there we don't.

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I am happy to see that in the last couple of days things have perked up on Wall Street. Things have gone up as often as they have gone down this week, but I'm afraid that "the fundamentals" still aren't very good. The average Joe (as opposed to faux plumbers) doesn't have money to buy anything. The housing bubble and the subprime mortgage scam allowed the looting of America to continue for a few years longer than it naturally would have, but now most Americans are wrung dry. It will take someone who's willing to change things, to put money back into the pockets of the people, an actual class warrior, in order to really turn things around. That means changes in labor laws and their enforcement to help the average worker, rewriting of trade deals, taxing those who've got fat at the Republican banquet table. That's going to be a lot of work, and the media won't be quiet about this either.

I think that Paulson and his buddies just wanted to move this stinking pile past election day and leave it on Obama's doorstep. This bailout is essentially the same as Eliot Spitzer's public denunciation: a delaying tactic.

See ya'll in the bank vault in Switzerland.