Ray,
As for the silver mines at Potosi, it was the
Spanish who enslaved the Bolivians there, not the
English -- we had quite a different culture (then
and now). When we were settling into North
America during the same period we didn't enslave
a single indigenous American there (as far as I'm
aware, though I stand to be corrected). It was
the French settlers of the interior who were
doing that. The history books tell me that the
English, often Quaker-led, tried to engage the American Indian with Treaties.
Keith
At 13:46 16/09/2012, REH wrote:
Thanks for the history. I experienced that when
my professional job from 1960 to the present
became one seventh the value from the time that
I was paying for the service. What the
economists told me here and elsewhere, not that
it was the Gold standard but that it was
productivity. The work still requires the same
extreme expertise, continual education and
unpaid practice but I make 1/7th what my
teachers made and my current Maestro makes no
more than I do. When everyone else of extreme
expertise saw their salaries raise to keep up
with the dollar, our's didn't. He was knighted
by the French government and teaches all over
the world and is emeritus at the most
prestigious school and his salary, like mine, is
1/7th the value due to nothing. All of this
crap means nothing except the market is
incapable of rewarding genuine value and
expertise. Today, it is happening all over
the professions. The God I mentioned, by the
way, is the old forest God, should we call it
"Pan" or "Herne's" invisible hand? The man
who called Herne was Adam Smith and the nation
followed him just like the third act of
Falstaff. Laissez Faire is the old European
method of forestry which trusts nature rather
than shaping nature for the good of all
life. Hell, they don't even think the rest of world is conscious at all.
But thank you Keith for your willingness to keep
me straight about the history. I realize
firsthand how Europeans feel about gold. We
called it the shit of the Gods. It has
certainly proven toxic to us with its moonchild
silver. Almost eight million men, women and
children died in the mines at Potosi for the
moon god under the Spanish. Arbeit macht
Frei. Komm Susser Tod. As for the shit of
the sun, that all started for us at Jamestown
with Pokie and Johnny. They didn't find Gold
so they addicted the world to tobacco. Arbeit macht Frei, komm susser Tod.
REH
From: Keith Hudson [mailto:[email protected]]
Sent: Sunday, September 16, 2012 5:10 AM
To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION; Ray Harrell
Subject: Re: [Futurework] FW: For those who believe God's on Wall Street.
At 20:35 15/09/2012, REH wrote:
Did any of you know this guy?
No, but it all seems authentic to me. First
class article. What Powell and Hakin don't cover
in this biographical type of article is the step
by step breakdown in both the validity and value
of money since 1918 (since when, the US$ is now worth 1/50th of what it was).
This is the background in four simple steps:
1. After the 1918-1918 War the stiff-necked
refusal of the Bank of England to go back onto
the gold-backed pound except under pre-war
exchange value of pound versus US dollar. Keynes
and the UK Treasury wanted to reinstitute
gold-backing but only at the new, realistic
post-war rate of exchange of the pound (having
depreciated twice against the dollar during the
War). Under the US Constitution the dollar was
already gold-backed (particularly since 1913
with the formation of the US Fed). This was the
beginning of the decline of the British Empire
and a vastly accelerated growth in American economic power;
2. In 1931 an economically confused President
Roosevelt, against the advice of the US Treasury
(and almost all the eminent economists at that
time), established a false gold-backing of the
dollar by changing the value of the dollar from
the free-market value of 1 ounce of pure gold
($35) to a fixed value. By thus fixing the
dollar and gold at both ends, the dollar could
be inflated at a gentle trotting pace without
the electorate realizing it for decades.
Meanwhile the US government could trim its own
debts from month to month and give itself more
scope for colossal war expenditures (e.g. Korea, Vietnam,etc)
3. Meanwhile, European countries started cashing
in their US dollar surpluses (from exports to
America and American purchases of European
industries) by buying gold at $35/ounce from the
New York Fed and re-selling it at $40+ on the
open market. The "carry trade" reduced the US
stock of gold from about 25,000 tonnes in the
1950s to about 11,000 by the late 1960s -- and
accelerating. In 1971, President Nixon in a blue
funk, and against the Constitution, cut off gold
as the backing. One might say that Nixon was not
only as economically-confused as Roosevelt had
been but was now acting treasonably. The value
of the dollar now floated away from gold (the
real value of the dollar sinking), and Nixon
could now start to print more and more banknotes.
4. From 1971 to 2008 the value of the dollar
was not only depreciating but high street banks
were allowed to create credit far beyond
internationally-recognized reserves of about
10%, down to, in effect, nil or very close to
(typically 1% to 3%, just to show something in
their accounts!). Credit cards were let rip, so
were easier and easier house mortgages
(commercial mortgages even more so). The US Fed
and the US Treasury also turned blind eyes whole
new gigantic rafts of derivatives, made for
their own benefit by the investment banks, but
which finally (by 2008) had the effect of
expanding American money supply by about 10 times.
5. The above of the major steps in producing the
situation well described in the following
article. If you believe in Him, God knows what
is going to happen now with yet more QE announced by Bernanke.
Keith
(Excerpt) Sandys right; government created a
banking oligopoly with no accountability, said
Peter Solomon, a friend of Mr. Lewiss who runs an investment banking firm.
Sandy Lewis is describing where we are now.
From: Ray Harrell [ mailto:[email protected]]
Sent: Saturday, September 15, 2012 3:33 PM
To: Alex Leon; August Watters; Carol Dean Hood;
'Cole, Karen Watters'; Darcy Dunn;
<mailto:[email protected]>[email protected]; Dawn
Laird; 'Douthit, Paul and Marylyn'; 'Harrell ,
Rick'; Jane & Ron Lind-Garritson; 'Jane
Harrell'; Linda Whaley; 'mcore';
<mailto:[email protected]>[email protected]; 'Stephanie Weems'
Subject: For those who believe God's on Wall Street.
Uncle REH
September 15, 2012 NYTimes
A Lonely Redemption
By
<http://topics.nytimes.com/topics/reference/timestopics/people/p/michael_powell/index.html>MICHAEL
POWELL and
<http://topics.nytimes.com/top/reference/timestopics/people/h/danny_hakim/index.html>DANNY
HAKIM
ESSEX, N.Y. Striding barefoot through the
fields of his farm in the Adirondacks, S. B.
Lewis, known as Sandy, is talking without pause,
gesturing this way and that in a soft summer rain.
That Mr. Lewis is in a rage is not unusual. A
few days earlier, he had watched as the
computerized stock trading of Knight Capital ran amok.
If Knight blows, six firms follow, and the
whole corrupt thing goes up, he said. Predator
banks and hedge funds run the market for their
pleasure theres no rational structure, nothing!
He is just warming up. News reports have
revealed a world he knows intimately. Goldman
Sachs pays vast fines to avoid prosecution for
mortgage securities fraud. Barclays manipulates
interest rates. The Senate exposes HSBC as a
racketeering enterprise, laundering money for
drug cartels. Banks are laden with bad assets.
And Wall Street, Washington, the press corps,
everyone sits and stares like so many dumb cows.
The complicity on Wall Street is sickness! Mr.
Lewis says. He fixes you with his laser stare.
If you think the big firms are being honest
his tone slides streetwise well, sweetheart, go think something else!
The temptation is to dismiss Mr. Lewis, 73, as a
crank, except he once ruled as an eccentric
genius of arbitrage, with a preternatural feel
for the tectonic movements of the markets. He
has railed for decades about venalities now on
daily display. Rude truth is his currency.
He knows Wall Streets heights. He helped hire
Michael R. Bloomberg, and he invested the money
of two former Securities and Exchange Commission
chairmen, making a fortune in the 1980s. And he
knows its depths, since he
<http://www.nytimes.com/1989/08/31/business/a-prominent-trader-admits-he-schemed-to-rig-a-stock-price.html?pagewanted=all&src=pm>pleaded
guilty to stock manipulation in 1989, and was barred from the Street.
President Bill Clinton pardoned him, and a
federal court judge later said Mr. Lewis acted out of pure reforming impulse.
But he remains in self-imposed exile.
Mr. Lewis wants to flip over Wall Streets
paving stones and search for worms. He relies on
his singular strength: he discerns patterns
where most see random data. He forecast the
financial meltdown of 2008 that vaporized Bear
Stearns, Merrill Lynch and Lehman Brothers. In
2006, he warned a Bear Stearns executive: Bear is toast. Get out now!
Lehman Brothers, he notes, certified it was in
good health in June 2008 and issued stock,
attracting investment, including from the New
Jersey Teachers Pension and Annuity Fund.
Secretly, Lehman was on an intravenous drip, poisoned by bad debt.
My respect for their brains is too great to
think Lehmans top guys didnt know they were
conveying the cynical impression of health, Mr. Lewis said.
He is no less suspicious of Goldman Sachs, which
has alumni sprinkled across the upper reaches of
government. In a tough spot, Goldman obtained
extraordinary permission to make an overnight
metamorphosis from investment bank to traditional bank holding company.
Can I prove this was a wired deal? Absolutely
not, Mr. Lewis said. Am I certain of it? Only 100 percent.
As for the whirling,
three-million-shares-per-second casino of Wall
Street? He sees it as rigged. I would not risk
stocks under any circumstances, he said,
because we dont know when this thing is going to blow.
Nothing about Mr. Lewis is easy. He delights in
sending scabrous, insulting, free-associative
mass e-mails to journalists, financiers and
members of Congress. Show annoyance, and he
doubles down. You know what I do with tension? he said. I ratchet it up!
Not surprisingly, some dismiss him as a nut. As
striking are those who pay careful heed.
Sandys right; government created a banking
oligopoly with no accountability, said Peter
Solomon, a friend of Mr. Lewiss who runs an investment banking firm.
Arthur Aeder, a retired accounting executive,
was twice fired by Mr. Lewis. Not many
antagonize Goldman just for the hell of it, Mr.
Aeder said. Most people think, I have a family to feed.
Mr. Lewis is no less harsh on himself. After a
visit, he handed us laptops containing every
furious e-mail he had sent and received over 10 years.
The Wall Street ethic broke decades ago, he
said by way of goodbye. The stink is terrible.
MR. LEWIS was born to Wall Street royalty his
father, Cy, was managing partner at Bear Stearns
from 1949 to 1978. His parents were characters
out of a Fitzgerald novel: his father was
Jewish, debonair and domineering; he desired
power, wealth and a beautiful woman wife or
mistress, that mattered little. His mother,
Diana Bonnor, a member of the Protestant
establishment, was beautiful, brilliant and no
less formidable. She cared about social justice
and status and was profoundly uninterested in mothering.
I never remember her at breakfast, recalled
Roger Lewis, Mr. Lewiss younger brother. High
tea? Oh, yes. Cocktails? Yes! But breakfast? Never.
Cy doted on Sandy while Diana screamed at the
boy, striking him with a hair brush when he
refused to read, he said. A willful child, the
boy stopped speaking for days and sometimes
retreated onto a window ledge, sitting high above Park Avenue.
Another brother, John, renounced wealth, bought
clothes in thrift shops and became a well-known
legal-aid lawyer. Roger got off to a fine start
on Wall Street until the Grateful Dead moved
into his town house before Woodstock. He
ingested gobs of LSD, was arrested on charges of
selling drugs and served time. I broke all the
bonds of polite behavior, Roger said. Prison was pretty fascinating.
When Sandy Lewis was 10, his parents shipped him
off to Chicago and Bruno Bettelheims Orthogenic
School, an institution for emotionally disturbed
children. The first day, he held his breath
until he nearly passed out. But he credits the
school with saving his life; Bettelheim became a second father.
He had Brunos traits: he was arrogant,
controlling, all powerful and generous,
recalled George Kaiser, a former teacher at the school.
Mr. Lewis saw in Wall Street a three-dimensional
chess game played at great velocity. Brain not
brawn, and the smartest wins, yes! he said.
He came to conceive of the Street as a drainage
system, every pipe connected to another. Inside
information sluiced from brokerages to
white-shoe law firms to investment houses.
He glimpsed this world when he returned to New
York in 1964. He said he sat in the front of his
fathers Cadillac limousine, listening as Cy and
friends talked angrily about a partner who had
impersonated a reporter for The New York Times
and got a half-hour drop on a Supreme Court
decision. The firm profited by trading ahead of the news.
Mr. Lewis said he confronted his father that
night. Dad, you must fire that man. Cy shook his head: He is too valuable, Son.
That, Mr. Lewis said recently, was when I
realized that the trouble on Wall Street was systemic.
He refused to sit at the Four Seasons trolling
for inside tips and paying for call girls for clients.
He was fired by all the best firms: Salomon
Brothers, White Weld, Dean Witter and Merrill
Lynch. At Merrill, the chief executive officer
at the time, Donald Regan, pursued a system to
buy and sell stocks without using the exchange
floor. Mr. Lewis came to see this creation as unfair to the public.
So Mr. Lewis, in speeches and work with the
S.E.C., fought to make all sales transparent on
the floor of the exchange. In one of my
periodic periods of unemployment, I walked down
the street thinking, O.K., now Im going to
sabotage Don Regan, he said. I have six kids
and Im going to be eating worms.
He worked briefly for Ivan F. Boesky, until he
realized the arbitrage specialist was trolling
for inside information. Mr. Lewis quit and Mr. Boesky was later imprisoned.
To find a place that would not fire him, in 1980
Mr. Lewis established S. B. Lewis and Company.
The companys returns were meteoric over 50
percent annual returns after expenses. Former
employees recall a brilliant arbitrageur who
could, without warning, go to Sandy World, a
mental planetoid with a population of one.
Mr. Lewis brokered the merger between Sandy
Weills Shearson and James Robinsons American Express.
I told Robinson: Weills got the brains;
youve got great class. Its perfect, Mr. Lewis recalled.
He had found success, a lovely wife and five
boys and a girl, with a home in Short Hills,
N.J. Except his volcanic pit never stopped rumbling.
IN November 1988, Rudolph W. Giuliani, the
United States attorney, indicted Mr. Lewis on 22
charges, accusing him of manipulating the stock
of a large insurer. Mr. Giuliani was a
Savonarola in the canyons of mammon, and Mr.
Lewis would fall beneath his sword.
Rivals shared laughs at Sandy the Moralist laid
low. The trouble, however, took root not in
venality but in his mania to police his
industry. He had watched as insiders reaped
profits by driving down prices before shares went public.
He laid a trap. He asked another securities firm
to buy stock in the insurer to shore up the
price. Ill cover your losses and describe the
payments as investment banking services, he told them.
Mr. Lewis hoped to deliver a delicious kick to
the teeth of the insiders. He made not a dime;
his firm was not involved in the offering.
Years later, a federal judge, William C. Conner,
described Mr. Lewiss action as an act of
market vigilantism in which Lewis in no way
personally profited. He was infuriated, the
judge wrote, by what he viewed as the unethical actions of arbitrageurs.
He was the Lone Ranger, Mr. Solomon recalled,
and Giuliani treated him like a member of the corrupt club.
Prosecutors threatened Mr. Lewis with 15 years
if he went to trial. His wife, Barbara, urged
him to cut a deal. He argued prison would be
interesting. His bravado reinforced her fears.
Silver haired and trim, she looks at Mr. Lewis,
still consumed: I thought he would die. That was weak of me.
He pleaded guilty to three charges, and the
judge handed him three years probation and a $250,000 fine.
TELL us about Bill Clinton. Mr. Lewis cannot
resist a smile; even by his standards, this is a weird tale.
In the summer of 1994, Mr. Lewis in exile
got a phone call at his Maine home from his
friend, Douglas S. Eakeley. Mr. Eakeley was also
an old friend of Mr. Clintons.
I want you to go to a fund-raiser in Portland,
Mr. Eakeley said, and talk with the president about his womanizing.
Is this, Mr. Lewis asked, an intervention?
As it happens, Mr. Lewis possesses a sixth sense
for psychic pain. He can pick the addicted, the
sick and the depressed out of a crowd. His
fractured childhood and pathological candor give
him an expert hand with the singed.
He rounded up Barbara and a friend, Dr. Stanley
Evans, and drove to see Mr. Clinton at the Holiday Inn by the Bay.
Mr. Lewis introduced himself. Youre Dougs
friend? the president said, according to Mr.
Lewis and Dr. Evans. Wait, well talk.
The Secret Service escorted Mr. Lewis, his wife
and the doctor into the kitchen, and the president followed.
Sir, Mr. Lewis recalled saying as he stared at
Mr. Clinton. Doug thought maybe I should spend
a weekend with you. It would be the two of us only.
Mr. Lewis said the president was taken aback. What is this about?
Sir, Mr. Lewis said, this is about your most
personal business. You probably wont be too
happy with me by Monday morning, but I think we can avoid a train wreck.
The presidents face flushed. Dr. Evans realized
his friend was confronting the president about
his extramarital affairs. I thought Sandy had lost his mind, he said.
The weekend session never took place.
Revelations of the presidents sexual dalliance
with Monica Lewinsky came years later.
Mr. Eakeley is circumspect. Sandy has
incredible intuition and intellect, and I knew
he could help if the president could stand it,
he said. Sandy may have alarmed the president,
but I dont think he repelled him.
Mr. Clintons office declined to comment.
So it goes for Mr. Lewis on his walk, decades
long, through the wilderness. One night, he
said, he yanked a truck driver out of a fiery
wreck on the New Jersey Turnpike, only to
discover that the driver had Mafia connections.
He said a mob representative told him he could
call in his i.o.u. anytime; Mr. Lewis declined, politely.
He became the de facto impresario of the Clinton
Correctional Facility, a prison near his farm in
the Adirondacks, arranging frequent
performances. The prison has housed a whos who
of the criminal and homicidal, from Lucky
Luciano to the serial killer Joel Rifkin.
Recently, Mr. Lewis brought in Helena Baillie,
30, an accomplished violinist who is akin to his
surrogate daughter, to perform Bachs Chaconne
in the Church of St. Dismas, the Good Thief. Many prisoners were in tears.
Mr. Eakeley said Mr. Lewis might be better for
his exile. One of Mr. Lewiss sons, John, is not
convinced. He sees a father become walking id.
Giuliani, he said, obliterated some part of him.
In 2000, Mr. Eakeley and former Attorney General
Nicholas deB. Katzenbach worked pro bono and
submitted a pardon application to Mr. Clinton.
In January 2001, just before leaving office, the president signed it.
Six years later, Judge Conner overturned the
S.E.C. order that barred Mr. Lewis from Wall
Street. Federal regulations now outlaw the very
practice his actions were meant to thwart, the judge noted.
No cloud of mellow descended. Mr. Lewis trailed
the S.E.C. counsel out of the courthouse. I
will rip your guts out, he bellowed. Letter to follow!
A few days later, he looked at the mountains and
experienced an epiphany: Ive gotten my redemption, and no one cares.
THE phone rings and Mr. Lewis, in midsentence of
a long disquisition, picks up the receiver. A
North Country car dealer asks about the economy.
Yes? Yes! he listens for 30 seconds. Its
going to get a lot worse. Well be burning scrap
wood in our fireplaces before its over. Goodbye!
Among residents of this rural land, Mr. Lewis
has a reputation as a savant. He warned that the
housing market was overheating years ago and
sold several properties. He converted to cash before the 1987 stock crash.
Still, he could not complete the last act in his
redemptive play. Financiers with White House
connections solicited his advice during the 2008
crisis. But he was not invited into the circle
of advisers who, to his mind, poorly served this young president.
As a Wall Street friend warned in an e-mail:
Sandy, you constantly kill yourself. You exhaust folks.
Mr. Lewis considers his plight over a dinner
with Barbara. His eyes are red, his voice a
rasp. Im bright as hell, but Im impossible to
live with. Barbara nods. I am in a state of
outrage all the time. Barbara nods. I bring
this Orthogenic morality to everything on Wall
Street, and its unsustainable. Barbara, dry as gin, says, No kidding.
Mr. Lewis sees a banking system in unstable
remission. Goldman answers to no one. China and
Europe are wobbling, deflation is at the door, another crash is coming.
The criminality is astounding, he says. You
have a complete confusion between principal and principle.
He is pacing again. You dont understand what
it is to find someone on Wall Street who tells
it like it is. You want to get real? Baby, lets do the full root canal!
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Keith Hudson, Saltford, England
<http://allisstatus.wordpress.com/>http://allisstatus.wordpress.com
Keith Hudson, Saltford, England http://allisstatus.wordpress.com
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