Greg Palast: The confidential memo at the heart of the global financial crisis

By Greg Palast
August 22, 2013
Vice.com

When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it.

The Memo confirmed every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet. When you see 26.3 percent unemployment in Spain, desperation and hunger in Greece, riots in Indonesia and Detroit in bankruptcy, go back to this End Game memo, the genesis of the blood and tears.

The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.

The memo is authentic.

I had to fly to Geneva to get confirmation and wangle a meeting with the Secretary General of the World Trade Organisation, Pascal Lamy. Lamy, the Generalissimo of Globalisation, told me,

“The WTO was not created as some dark cabal of multinationals secretly cooking plots against the people… We don’t have cigar-smoking, rich, crazy bankers negotiating.”

Then I showed him the memo.

It begins with Larry Summers’ flunky, Timothy Geithner, reminding his boss to call the Bank bigshots to order their lobbyist armies to march:

“As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs…”

To avoid Summers having to call his office to get the phone numbers (which, under US law, would have to appear on public logs), Geithner listed the private lines of what were then the five most powerful CEOs on the planet. And here they are:

Goldman Sachs: John Corzine (212)902-8281

Merrill Lynch: David Kamanski (212)449-6868

Bank of America: David Coulter (415)622-2255

Citibank: John Reed (212)559-2732

Chase Manhattan: Walter Shipley (212)270-1380

Lamy was right: They don’t smoke cigars. Go ahead and dial them. I did, and sure enough, got a cheery personal hello from Reed – cheery until I revealed I wasn’t Larry Summers. (Note: The other numbers were swiftly disconnected. And Corzine can’t be reached while he faces criminal charges.)

It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling. The horror is in the purpose of the “end game” itself.

Let me explain:

The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading”. JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets”.

Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet — in one single move. It was as brilliant as it was insanely dangerous.

How could they pull off this mad caper? The bankers’ and Summers’ game was to use the Financial Services Agreement (or FSA), an abstruse and benign addendum to the international trade agreements policed by the World Trade Organisation.

Until the bankers began their play, the WTO agreements dealt simply with trade in goods – that is, my cars for your bananas. The new rules devised by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.

Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products”.

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.

The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organisation.

Bankers Go Bananas

Why in the world would any nation agree to let its banking system be boarded and seized by financial pirates like JP Morgan?

The answer, in the case of Ecuador, was bananas. Ecuador was truly a banana republic. The yellow fruit was that nation’s life-and-death source of hard currency. If it refused to sign the new FSA, Ecuador could feed its bananas to the monkeys and go back into bankruptcy. Ecuador signed.

And so on – with every single nation bullied into signing.

Every nation but one, I should say. Brazil’s new President, Inacio Lula da Silva, refused. In retaliation, Brazil was threatened with a virtual embargo of its products by the European Union’s Trade Commissioner, one Peter Mandelson, according to another confidential memo I got my hands on. But Lula’s refusenik stance paid off for Brazil which, alone among Western nations, survived and thrived during the 2007-9 bank crisis.

China signed – but got its pound of flesh in return. It opened its banking sector a crack in return for access and control of the US auto parts and other markets. (Swiftly, two million US jobs shifted to China.)

The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade. Among the notorious transactions legalised: Goldman Sachs (where Treasury Secretary Rubin had been co-chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation. Ecuador, its own banking sector de-regulated and demolished, exploded into riots. Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans. Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim – and the continent is now being sold off in tiny, cheap pieces to Germany.

Of course, it was not just threats that sold the FSA, but temptation as well. After all, every evil starts with one bite of an apple offered by a snake. The apple: the gleaming piles of lucre hidden in the FSA for local elites. The snake was named Larry.

Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.

And the memo reveals a lot about Summers and Obama.

While billions of sorry souls are still hurting from worldwide banker-made disaster, Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called “Citigroup”. Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup – which went bankrupt while managing to pay Rubin a total of $126 million.

Then Rubin took on another post: as key campaign benefactor to a young State Senator, Barack Obama. Only days after his election as President, Obama, at Rubin’s insistence, gave Summers the odd post of US “Economics Tsar” and made Geithner his Tsarina (that is, Secretary of Treasury). In 2010, Summers gave up his royalist robes to return to “consulting” for Citibank and other creatures of bank deregulation whose payments have raised Summers’ net worth by $31 million since the “end-game” memo.

That Obama would, at Robert Rubin’s demand, now choose Summers to run the Federal Reserve Board means that, unfortunately, we are far from the end of the game.

Special thanks to expert Mary Bottari of Bankster USA http://www.BanksterUSA.org without whom our investigation could not have begun.

The film of my meeting with WTO chief Lamy was originally created for Ring of Fire, hosted by Mike Papantonio and Robert F. Kennedy Jr.

Further discussion of the documents I laid before Lamy can be found in “The Generalissimo of Globalization,” Chapter 12 of Vultures’ Picnic by Greg Palast (Constable Robinson 2012).

Follow Greg on Twitter: @Greg_Palast

http://www.vice.com/en_uk/read/larry-summers-and-the-secret-end-game-memo

Reprinted under Fair Use Rules.

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15 nuclear reactors at grave risk in Ukraine, with update

Source: Energoatom

Update, November 13:

A company in South Africa is now refusing to send more coal to Ukraine. A shipment of 500,000 tons of coal was delivered to Ukraine already, but 1 million tons was ordered. Ukraine is now attempting to find another company to supply coal, but so far, there has been no deal.

Source:http://www.uacrisis.com/sar-refuses-to-deliver-more-coal-to-ukraine/

Update, September 7, 2014:

The Kiev regime is buying 1 million tons of coal from South Africa due to the coal shortage in Ukraine. Prime Minister Yatsenyuk said on September 3 that the first ship was being loaded. [1]

 

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August 25, 2014

This site has a map of where the reactors are in Ukraine. Those reactors are all across the country.
http://www.world-nuclear.org/info/Country-Profiles/Countries-T-Z/Ukraine/

Coal supplies 40% of the power in Ukraine. On Aug. 19, ZeroHedge reported that Ukraine had less than 3 weeks of coal left because of the US-backed war against the Ukrainian people.

Now, the supply is down to less than 2 weeks.

50% of coal mines are closed due to the war. Coal production is way down. Supply roads have been destroyed.
http://www.zerohedge.com/news/2014-08-19/ukraine%E2%80%99s-next-crisis-economic-disaster

Why is that important?

Nuclear reactors rely on grid power to keep reactor cores and fuel rods cool.

If the electric grid goes down, reactors have to rely on generators.

From nuclear expert Arne Gundersen:

the most likely type of a nuclear accident is caused by a loss of offsite power.  That is what happened at Fukushima:  the power system AROUND the plant broke down.  If that happens, not only will the plant not have power, but the street lights won’t work.  According to the [Nuclear Regulatory Commission], the street lights DO work.  Not only that, but your home lighting won’t work and your radio and TV won’t work.  But according to the NRC, you will be able to contact the outside world by phones or by radio or by television.   …remember the most likely cause of a nuclear accident is loss of offsite power and that has NEVER been part of an emergency plan, assuming that all of that does not work.

http://fairewinds.com/content/white-house-nrc-recommend-50-mile-fukushima-evacuation-yet-insist-us-safe-only-10

If there are brownouts or blackouts, will backup generators function and keep functioning to keep the reactor cores and fuel rods cool?

Generators aren’t maintained, and they break, like at Fukushima. They’re not built to do the work required. They must come on full power immediately and last for days, weeks, or months until grid power is restored. If generators do miraculously work, how will they be fueled until coal production resumes if roads are impassable? How will coal production resume if miners are fighting against Kiev militias, have evacuated, or have been killed?

Greg Palast writes:

A page from the notebook of an Emergency Diesel Generator expert, R.D. Jacobs, hired to monitor a test for a nuclear reactor’s back-up cooling system.

This is to record that on my last visit,….I pressed [a company executive] saying that we just did not know what the axial vibration of the crankshaft was doing to the [diesel] units. I was unable to impress him sufficiently.

The diesels were “tested” by turning them on for a few minutes at low power. They worked find. But R.D., a straight shooter, suspected problems. He wanted the motors opened and inspected. He was told by power company management to go to hell.

When we forced the plant builder [in Suffolk County, New York] to test the three Emergency Diesel Generators in emergency conditions, one failed almost immediately (the crankshaft snapped, as R.D.[Jacobs} predicted), then the second, then the third. We named the three diesels “Snap, Crackle, and Pop.”

…I knew that all these diesels were basically designed, or even taken from, cruise ship engine rooms or old locomotives. . I’m not an engineer, but I suspect a motor designed for a leisurely float n Bermuda is not fit for a life-and-death scramble. So, I asked [an industry insider], “They really can’t work at all, the diesels, can they?”

That’s when he introduced me to the phrase “crash start.”

On a ship, he explained, you would take half an hour to warm up the bearings, and then slowly build up to “critical” crankshaft speed, and only then add the “load.” the propeller…

That’s for sailing. But in a nuclear emergency, “the diesels have to go from stationary to taking a full load in less than ten seconds.”

Worse, to avoid having to buy additional diesels, the nuclear operators turbo-charge them, revving them to 4,000 horsepower in ten seconds when they are designed for half that output.

The result: snap, crackle, pop.

I learned that, at Fukushima, at least two of the diesels failed before the tsunami hit. What destroyed those diesels was turning them on. In other words, the diesels are junk, are crap, are not capable of getting up to full power in seconds, then run continuously for days….

”So, you saying emergency diesels can’t work in an emergency?”

“Actually, they’re just not designed for it.”

from Vulture’s Picnic, “Fukushima Texas” p. 294-297

Fukushima’s ongoing radiation is massively contaminating the air and ocean. See ENE News (www.enenews.com) for up-to-date information on that catastrophe. That radiation circles the world constantly. That’s from four explosions and three reactors that melted down and melted through.

Think Fukushima X 5.

Think Chernobyl X 15.

Even greedy and immoral oligarchs and American corporations, racist ultra-right Nazi thugs, and war-lusting Americans, cannot be that stupid or insane, can they?

This would doom life on earth. What planet are they planning to escape to in the event of such a disaster?

Get the word out now. Tell public officials: stop this foolish, immoral, and murderous American adventure now.

All of our lives are at stake.

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[1]

http://www.bdlive.co.za/world/europe/2014/09/03/ukraine-to-buy-1-million-tonnes-of-coal-from-sa
Ukraine to buy 1-million tonnes of coal from SA

Note: there is so much false information in this story, it is hopeful that the coal shipment is true and will get to Ukraine in time.